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01/10 19:54
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlighted strong revenue growth, particularly in Scoliosis and adjusted EBITDA improvement. Despite a decline in gross profit margin, operational efficiencies and revenue growth led to a reduced net loss per share. The Q&A session revealed positive sentiment towards clinic expansion and international growth, although some guidance was vague. The company's rapid expansion and product launches, coupled with strong performance in Trauma, suggest a positive outlook. However, the lack of clear guidance and margin decline may temper the positive sentiment, resulting in an overall positive rating.
Revenue Worldwide revenue for Q2 2025 was $61.1 million, a 16% increase compared to Q2 2024. U.S. revenue was $48.1 million, a 17% increase, while international revenue was $12.9 million, a 12% increase. Growth was driven by strong performance in Trauma and Deformity, Scoliosis, and OPSB, slightly offset by lower growth in international revenues.
Trauma and Deformity Revenue Global revenue for Trauma and Deformity was $41.7 million in Q2 2025, a 10% increase compared to the prior year. Growth was driven by PNP Femur, PNP Tibia, DF2, and OPSB, partially offset by lower T&D set sales to Latin America.
Scoliosis Revenue Global revenue for Scoliosis was $18.5 million in Q2 2025, a 35% increase compared to the prior year. Growth was driven by increased sales of RESPONSE, ApiFix non-fusion system, and revenue from 7D technology.
Gross Profit Margin Gross profit margin for Q2 2025 was 72%, compared to 77% in Q2 2024. The decline was primarily due to higher 7D growth and higher international set sales, which generate lower gross margins.
Operating Expenses Total operating expenses for Q2 2025 were $54.7 million, an 18% increase compared to the prior year. The increase was driven by $3.0 million in restructuring charges, increased noncash stock compensation, and additional personnel to support growth, including OPSB clinics.
Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $4.1 million, a 50% improvement compared to $2.6 million in Q2 2024. This improvement reflects better operational efficiency and growth in revenue.
Net Loss Per Share Non-GAAP net loss per share for Q2 2025 was $0.11, compared to $0.23 in Q2 2024. The improvement was due to increased revenue and operational efficiencies.
Set Deployment $4.6 million worth of sets were consigned in Q2 2025, compared to $7.8 million in Q2 2024. The decrease reflects a shift in strategy and operational adjustments.
DF2: Continues to outperform expectations with rapid surgeon adoption and growing demand. It is becoming the new standard of care for managing pediatric femoral shaft fractures, optimizing healthcare resource utilization.
3P Pediatric Plating Platform Hip system: Completed its first surgical case and is expected to drive growth for the remainder of 2025 and 2026. The next system, 3P Small and Mini, is on track for FDA submission.
VerteGlide: Expected to complete its first cases in August, providing further growth in the EOS product portfolio.
OPSB expansion: Expanded into new territories including California, New York City, Denver, Ohio, and internationally in Ireland. Now operates over 40 clinics worldwide, surpassing the 2025 goal of 4 new territories.
International sales: Strong demand in Europe and the Middle East, with scoliosis set sales to stocking distributors. However, lower Trauma and Deformity set sales in Brazil impacted growth.
Revenue growth: Achieved record revenue of $61.1 million in Q2 2025, a 16% increase year-over-year. U.S. revenue grew by 17%, while international revenue grew by 12%.
Adjusted EBITDA: Improved to $4.1 million in Q2 2025, a 50% increase compared to the prior year.
Gross margin: Decreased to 72% from 77% due to higher 7D growth and international set sales.
Restructuring plan: Implemented a global restructuring plan aimed at improving operational efficiency and reducing costs, which will benefit H2 2025 and 2026.
Set deployment: $4.6 million of sets consigned in Q2 2025, with a focus on leveraging prior deployments to drive growth.
Gross Profit Margin Decline: Gross profit margin decreased from 77% in Q2 2024 to 72% in Q2 2025, driven by higher 7D growth and international set sales, which generate lower margins. This could impact overall profitability.
Restructuring Charges: The company incurred $3.0 million in restructuring charges related to a global restructuring plan aimed at improving operational efficiency and reducing costs. This indicates potential challenges in managing operational expenses.
Lower Trauma and Deformity Set Sales in Brazil: International growth was offset by lower Trauma and Deformity set sales in Brazil, which could hinder overall international revenue growth.
Increased Operating Expenses: Operating expenses increased by 18% year-over-year, driven by restructuring charges, noncash stock compensation, and additional personnel costs. This could pressure profitability.
Supply Chain and Regulatory Challenges: The company highlighted the extensive process of EU MDR approval for implants, which could delay product launches and impact international growth.
Cash Flow Concerns: The company drew down $25 million on a line of credit, indicating potential liquidity concerns despite aiming for free cash flow positivity by Q4 2025.
Revenue Guidance: The company has raised its full-year 2025 revenue guidance to a range of $237 million to $242 million, representing year-over-year growth of 16% to 18%.
Adjusted EBITDA: The company expects to produce $15 million to $17 million in adjusted EBITDA for 2025.
Free Cash Flow: The company anticipates generating its first quarter of positive free cash flow in Q4 2025 and achieving full-year free cash flow breakeven in 2026.
Set Deployment: Approximately $15 million of new sets are expected to be deployed in 2025.
Scoliosis Business Growth: Strong growth of 35% in the Scoliosis business is expected to continue, driven by new surgeon adoption, product launches, and international expansion.
Trauma and Deformity (T&D) Business: The T&D business is expected to grow, supported by new product launches like PNP Tibia and DF2, as well as FDA approval for sterile products, which will enhance efficiency.
OPSB Expansion: The OPSB business is expected to continue its strong growth trajectory, with further clinic expansions planned in the U.S. and internationally, including Ireland.
3P Pediatric Plating Platform: The company plans to submit the next 3P system, 3P Small and Mini, to the FDA in the coming months, with additional systems to be launched annually over the next several years.
International Expansion: The company is focusing on international growth, including EU MDR approvals and new product launches in Europe in 2026.
EOS Product Portfolio: The first cases with VerteGlide are expected to be completed in August 2025, with additional EOS products progressing as planned.
The selected topic was not discussed during the call.
The earnings call indicates strong financial performance with improved EBITDA and reduced free cash flow usage. The company is poised for growth with new product launches and international expansion, particularly in the pediatric space, benefiting from competitors exiting. Despite increased operating expenses, profitability improvements are sustainable, and revenue guidance has been raised. The Q&A section highlights management's confidence in growth and strategic initiatives, with some uncertainties in market share data and 7D placements. Overall, the positive outlook and strategic focus suggest a likely positive stock price movement.
The earnings call highlighted strong revenue growth, particularly in Scoliosis and adjusted EBITDA improvement. Despite a decline in gross profit margin, operational efficiencies and revenue growth led to a reduced net loss per share. The Q&A session revealed positive sentiment towards clinic expansion and international growth, although some guidance was vague. The company's rapid expansion and product launches, coupled with strong performance in Trauma, suggest a positive outlook. However, the lack of clear guidance and margin decline may temper the positive sentiment, resulting in an overall positive rating.
The earnings call presented strong financial performance with a 40% revenue increase and EPS beat, despite a slight gross margin decline. Guidance was optimistic, with raised revenue expectations and positive free cash flow projected by 2025. The Q&A highlighted potential growth in Europe post-EU MDR approval and OPSB expansion. Despite some regulatory and economic challenges, the overall sentiment is positive, with strong growth and strategic plans in place. The lack of a share repurchase or dividend program slightly tempers the positive outlook, but the overall impact is expected to be positive in the short term.
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