You are the owner of this page.

OrthoPediatrics Corp. Reports Second Quarter 2020 Financial Results

WARSAW, Ind., Aug. 05, 2020 (GLOBE NEWSWIRE) -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq:KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, announced today its financial results for the second quarter ended June 30, 2020.

Second Quarter 2020 and Recent Business Highlights              

  • Generated total revenue of $13.6 million for second quarter 2020, down 25.3% from $18.2 million in second quarter 2019 driven primarily by the impact of the COVID-19 pandemic; U.S. revenue decline was 12.3% for the second quarter 2020 compared to the second quarter 2019
  • Commenced initial U.S. launch of the ApiFix Minimally Invasive Deformity Correction (“ApiFix”) system in June following its acquisition in April and are encouraged by the completion of the first cases
  • Expanded the domestic sales organization to 164 consultants, up 7.9% from second quarter 2019 of 152 consultants
  • Deployed $5.8 million of consignment sets in second quarter 2020, compared to $9.3 million in the same period prior year
  • Completed follow-on public offering in June with net proceeds of $70.4 million
  • Continued Double-Diamond sponsorship for the 2020 Pediatric Orthopaedic Society of North America (“POSNA”) Virtual Meeting in May

Mark Throdahl, Chief Executive Officer of OrthoPediatrics, commented, “The COVID-19 pandemic is a test of a company’s culture and its leadership. During this crisis, OrthoPediatrics’ associates have risen together to support our surgeons and their patients. Despite the overall sales decline for the quarter from prior year, we have seen significant and consistent monthly improvement throughout the period. We also continue executing across all our key initiatives. These include the acquisition of ApiFix and the domestic launch of its game-changing technology for treating scoliosis, record conversion of new Orthex customers, new product development, regulatory compliance advancements, set consignments, and clinical education support. We maintained our Double Diamond sponsorship of pediatric surgical societies in the U.S. and Europe, when others reduced or eliminated their contributions entirely, which has attracted extensive surgeon notice.”

Mr. Throdahl continued, “We would like to thank our shareholders for their continued support of our recent $70 million capital raise that strengthens our balance sheet. We remain committed to the health and welfare of our associates, guaranteeing their jobs and salaries, and we would like to thank them for their commitment and extraordinary productivity while working from home. Finally, we would like to recognize healthcare providers everywhere for their skill, resilience, and selflessness treating patients during this pandemic.”

Second Quarter 2020 Financial Results
Total revenue for the second quarter of 2020 was $13.6 million, a 25.3% decrease compared to $18.2 million for the same period last year. U.S. revenue for the second quarter of 2020 was $12.1 million, a 12.3% decrease compared to $13.8 million for the same period last year, representing 89.4% of total revenue. International revenue for the second quarter of 2020 was $1.4 million, a 66.8% decrease compared to $4.4 million for the same period last year, representing 10.6% of total revenue.  International markets continue to be impacted by COVID as there are fewer stand-alone pediatric hospitals and procedures are much slower to return. Total revenue performance continued to improve throughout the quarter, particularly domestically which delivered year over year growth in June.

Trauma and Deformity revenue for the second quarter of 2020 was $9.2 million, a 22.4% decrease compared to $11.9 million for the same period last year. Scoliosis revenue was $3.8 million, a 34.6% decrease compared to $5.9 million for the second quarter of 2019. Sports Medicine/other revenue for the second quarter of 2020 was $0.5 million, a 20.1% increase compared to $0.4 million for the same period last year. Trauma procedures continue stronger while Deformity Correction and Scoliosis procedures continue to see the impact of COVID and selective closure of elective surgeries.

Gross profit for the second quarter of 2020 was $10.1 million, a 26.1% decrease compared to $13.6 million for the same period last year. Gross profit margin for the second quarter of 2020 was 74.0%, compared to 74.8% for the same period last year.

Total operating expenses for the second quarter of 2020 were $17.1 million, a 10.8% increase compared to $15.4 million for the same period last year. The increase in operating expenses was driven by a 61.0% increase in general and administration expense primarily as a result of increased non-cash stock compensation as well as depreciation and the transaction expenses incurred for the acquisition of ApiFix. Operating loss for the second quarter of 2020 was ($7.0) million compared to ($1.8) million for the same period last year.

Net interest expense for the second quarter of 2020 was $1.4 million, compared to $0.6 million for the same period last year.

Net loss for the second quarter of 2020 was ($9.4) million, compared to ($2.6) million for the same period last year. Net loss per share for the period was ($0.54) per basic and diluted share, compared to ($0.18) per basic and diluted share for the same period last year. Adjusted EBITDA for the second quarter of 2020 was ($2.3) million as compared to $0.6 million for the second quarter of 2019. See below for additional information and a reconciliation of non-GAAP financial information.

The weighted average number of diluted shares outstanding for the three-month period ended June 30, 2020 was 17,549,118 shares.

In the second quarter of 2020, we had 164 sales representatives, up 7.9% compared to 152 in the same period of 2019.

The change in property and equipment during the second quarter of 2020 was $1.2 million, which compared to $3.6 million for the same period last year. This reflects the deployment of consigned sets, which includes product specific instruments and cases and trays, and acquisition related costs. Including the implants, $5.8 million of consigned sets were deployed during the second quarter of 2020, compared to $9.3 million during the second quarter of 2019.

As of June 30, 2020, cash and restricted cash were $114.4 million, compared to $54.9 million as of March 31, 2020, and the Company had approximately $21.1 million in total outstanding indebtedness, with the full amount of its $15.0 million revolving credit facility currently available.

Full Year 2020 Financial Guidance Suspended
Due to the rapidly evolving environment and continued uncertainties surrounding the duration and impact of COVID-19, OrthoPediatrics maintains suspension of its revenue growth and set consignment guidance for the full year 2020.

Conference Call
OrthoPediatrics will host a conference call on Thursday, August 6, 2020, at 8:00 a.m. ET to discuss the results. The dial-in numbers are (888) 771-4371 for domestic callers and (847) 585-4405 for international callers. The conference ID number is 49857703. A live webcast and replay of the conference call will be available online from the investor relations page of the OrthoPediatrics’ corporate website at www.orthopediatrics.com.

Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of U.S. federal securities laws. You can identify forward-looking statements by the use of words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "could," "believe," "estimate," "project," "target," "predict," "intend," "future," "goals," "potential,” "objective," "would" and other similar expressions. Forward-looking statements involve risks and uncertainties, many of which are beyond OrthoPediatrics’ control. Important factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: the risks related to COVID-19, the impact such pandemic may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 5, 2020, as updated and supplemented by our other SEC reports filed time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws.

Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of Adjusted EBITDA, which differs from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA in this release represents net loss from continuing operations, plus interest expense, net plus other expense, depreciation and amortization, stock-based compensation expense, fair value adjustment of contingent consideration, and acquisition related costs. Adjusted EBITDA is presented because the Company believes it is a useful indicator of its operating performance. Management uses the metric as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes this measure is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The Company’s presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA on a supplemental basis. The Company’s definition of this measure is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain a reconciliation of Net loss from continuing operations to non-GAAP Adjusted EBITDA.

About OrthoPediatrics Corp.
Founded in 2006, OrthoPediatrics is an orthopedic company focused exclusively on advancing the field of pediatric orthopedics. As such it has developed the most comprehensive product offering to the pediatric orthopedic market to improve the lives of children with orthopedic conditions. OrthoPediatrics currently markets 35 surgical systems that serve three of the largest categories within the pediatric orthopedic market. This product offering spans trauma and deformity, scoliosis, and sports medicine/other procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and 43 countries outside the United States. For more information, please visit www.orthopediatrics.com.

Investor Contacts
The Ruth Group
Emma Poalillo
(646) 536-7024
epoalillo@theruthgroup.com


ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 (In Thousands, Except Share Data)

 June 30,
2020
 December 31,
2019
    
ASSETS
Current assets:   
Cash$113,054  $70,777 
Restricted cash 1,361   1,250 
Accounts receivable - trade, less allowance for doubtful accounts of $185 and $506, respectively 14,897   16,003 
Inventories, net 48,875   38,000 
Notes receivable 656   564 
Prepaid expenses and other current assets 1,534   1,464 
Total current assets 180,377   128,058 
    
Property and equipment, net 24,131   21,349 
    
Other assets:   
Amortizable intangible assets, net 42,206   14,484 
Goodwill 68,420   13,773 
Other intangible assets 13,357   4,490 
Total other assets 123,983   32,747 
    
Total assets$328,491  $182,154 
    
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:   
Accounts payable - trade$6,003  $6,467 
Accrued compensation and benefits 4,501   4,349 
Current portion of long-term debt with affiliate 128   124 
Current portion of acquisition installment payable 11,485   - 
Other current liabilities 2,654   2,723 
Total current liabilities 24,771   13,663 
    
Long-term liabilities:   
Long-term debt with affiliate, net of current portion 21,017   26,067 
Acquisition installment payable, net of current portion 12,021   - 
Contingent consideration 28,100   - 
Operating lease liabilities, net of current portion 120   63 
Total long-term liabilities 61,258   26,130 
    
Total liabilities 86,029   39,793 
    
Stockholders' equity:   
Common stock, $0.00025 par value; 50,000,000 shares authorized; 19,544,008 shares and 16,723,128 shares issued and outstanding as of June 30, 2020 (unaudited) and December 31, 2019, respectively 5   4 
Additional paid-in capital 385,510   271,182 
Accumulated deficit (143,214)  (128,822)
Accumulated other comprehensive loss 161   (3)
Total stockholders' equity 242,462   142,361 
    
Total liabilities and stockholders' equity$328,491  $182,154 

ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)

 Three Months Ended June 30, Six Months Ended June 30,
 2020 2019 2020 2019
Net revenue$13,593  $18,200  $29,949  $32,856 
Cost of revenue 3,532   4,581   7,675   8,582 
Gross profit 10,061   13,619   22,274   24,274 
        
Operating expenses:       
Sales and marketing 5,620   7,606   13,184   14,153 
General and administrative 10,577   6,569   18,458   12,181 
Research and development 881   1,234   2,146   2,447 
Total operating expenses 17,078   15,409   33,788   28,781 
        
Operating loss (7,017)  (1,790)  (11,514)  (4,507)
        
Other expenses:       
Interest expense 1,399   632   1,778   935 
Fair value adjustment of contingent consideration 910   -   910   - 
Other expense 121   37   190   37 
Total other expenses 2,430   669   2,878   972 
        
Net loss from continuing operations (9,447)  (2,459)  (14,392)  (5,479)
Net loss from discontinued operations -   (159)  -   (159)
Net loss$(9,447) $(2,618) $(14,392) $(5,638)
Weighted average common shares – basic and diluted 17,549,118   14,451,979   16,986,485   14,409,752 
Net loss per share – basic and diluted$(0.54) $(0.18) $(0.85) $(0.39)


ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)

 For the Six Months Ended June 30,
 2020
 2019
    
OPERATING ACTIVITIES 
Net loss$(14,392) $(5,638)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization 3,285   1,912 
Stock-based compensation 3,453   1,163 
Fair value adjustment of contingent consideration 910   - 
Acquisition installment payable 886   - 
Changes in certain current assets and liabilities:   
Accounts receivable – trade 1,609   (5,499)
Inventories (9,599)  (5,139)
Prepaid expenses and other current assets 66   (14)
Accounts payable - trade (746)  1,934 
Accrued expenses and other liabilities (129)  357 
Other (50)  139 
Net cash used in operating activities - continuing operations (14,707)  (10,785)
Net cash provided by operating activities - discontinued operations -   371 
Net cash used in operating activities (14,707)  (10,414)
    
INVESTING ACTIVITIES   
Acquisition of Telos, net of cash acquired (1,670)  - 
Acquisition of ApiFix, net of cash acquired (1,723)  - 
Acquisition of Band-Lok intangible assets (796)  - 
Acquisition of Vilex and Orthex, net of cash acquired -   (49,926)
Purchases of licenses -   (170)
Purchases of property and equipment (5,160)  (8,514)
Net cash used in investing activities - continuing operations (9,349)  (58,610)
Net cash used in investing activities - discontinued operations -   (47)
Net cash used in investing activities (9,349)  (58,657)
    
FINANCING ACTIVITIES   
Proceeds from issuance of debt with affiliate -   30,000 
Payments on note with affiliate (5,000)  - 
Proceeds from issuance of common stock, net of issuance costs 70,207   - 
Proceeds from exercise of stock options 1,281   657 
Payments on mortgage notes (61)  (59)
Net cash provided by financing activities 66,427   30,598 
    
Effect of exchange rate changes on cash 17   - 
    
NET INCREASE (DECREASE) IN CASH 42,388   (38,473)
    
Cash and restricted cash, beginning of year$72,027  $60,691 
Cash and restricted cash, end of period$114,415  $22,218 
Less cash of discontinued operations, end of period -   360 
Cash and restricted cash of continuing operations, end of period$114,415  $21,858 

ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
(In Thousands)

SUPPLEMENTAL DISCLOSURES   
Cash paid for interest$513 $935
Transfer of instruments from property and equipment to inventory$229 $267
Issuance of common shares to acquire Vilex and Orthex$- $10,000
Issuance of common shares to acquire Telos$1,568 $-
Issuance of common shares to acquire ApiFix$35,176 $-
Issuance of common shares to purchase Band-Lok intellectual property$2,644 $-

ORTHOPEDIATRICS CORP.
NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY
(Unaudited)
(In Thousands)

 Three Months Ended June 30, Six Months Ended June 30,
Product sales by geographic location:2020 2019 2020 2019
U.S.$12,146 $13,848 $25,530 $24,115
International 1,447  4,352  4,419  8,741
Total$13,593 $18,200 $29,949 $32,856
        
 Three Months Ended June 30, Six Months Ended June 30,
Product sales by category:2020 2019 2020 2019
Trauma and deformity$9,220 $11,887 $21,430 $21,904
Scoliosis 3,836  5,866  7,547  10,124
Sports medicine/other 537  447  972  828
Total$13,593 $18,200 $29,949 $32,856

ORTHOPEDIATRICS CORP.
RECONCILIATION OF NET LOSS TO NON-GAAP ADJUSTED EBITDA
(Unaudited)
(In Thousands)

 Three Months Ended June 30, Six Months Ended June 30,
  2020   2019   2020   2019 
Net loss from continuing operations$   (9,447) $   (2,459) $  (14,392) $  (5,479)
Interest expense, net  1,399    632    1,778   935 
Other expense  121    37    190     37 
Depreciation and amortization  1,947    1,084    3,285   1,912 
Stock-based compensation  2,495    692    3,453   1,163 
Fair value adjustment of contingent consideration  910    -     910   - 
Acquisition related costs  256    589    336   589 
Adjusted EBITDA$  (2,319) $   575  $   (4,440) $  (843)

 

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.