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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Orthofix Medical Inc | NASDAQ:OFIX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.08 | 0.62% | 13.02 | 13.01 | 13.02 | 13.08 | 12.76 | 12.85 | 79,866 | 20:37:40 |
Recent Highlights
Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the first quarter ended March 31, 2024.
First quarter net sales were $188.6 million, an increase of 7.7% on a reported basis and 7.5% on a constant currency basis. Net loss was $(36.0) million and earnings per share ("EPS") was $(0.95) on a reported basis, representing an improvement of 44% when compared to the prior year period. Non-GAAP adjusted EBITDA was $7.7 million for the first quarter, representing a 220 basis point expansion over the prior year period.
“Orthofix executed well on a number of key priorities in the first quarter of the year and delivered notable growth in all of its U.S. businesses. We saw strength in many areas of our broadening portfolio, including outsized performance in U.S. Spine Fixation, U.S. Orthopedics, and the Bone Growth Therapies fracture market, with growth of 16%, 23%, and 17%, respectively,” said Massimo Calafiore, President and Chief Executive Officer of Orthofix. “I remain confident in the fundamentals of the Company and believe we are poised to continue driving value through profitable growth, increased operating leverage, and portfolio synergies. I look forward to sustaining the first quarter’s momentum through the remainder of 2024 and taking further advantage of the many opportunities for market share gain that lie within all of our core segments.”
1
Spine fixation is comprised of the Company's Spinal Implants product category, excluding motion preservation product offerings
Financial Results Overview
First Quarter 2024 Net Sales and Financial Results
The following table provides net sales by major product category by reporting segment on a reporting basis:
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in millions)
2024
2023
Change
Constant Currency Change
Bone Growth Therapies
$
52.5
$
47.7
10.0
%
10.0
%
Spinal Implants, Biologics and Enabling Technologies
108.8
101.5
7.2
%
7.2
%
Global Spine
161.3
149.2
8.1
%
8.1
%
Global Orthopedics
27.3
26.0
5.1
%
3.8
%
Net sales
$
188.6
$
175.2
7.7
%
7.5
%
Gross margins were 67.5% for the quarter and were 70.3% on a non-GAAP adjusted basis.
Net loss was $(36.0) million, or $(0.95) per share, compared to net loss of $(60.9) million, or $(1.71) per share in the prior year period. Non-GAAP adjusted EBITDA was $7.7 million, or 4.1% of net sales, compared to non-GAAP adjusted EBITDA of $3.2 million, or 1.8% of net sales, in the prior year period.
Liquidity
Cash, cash equivalents, and restricted cash on March 31, 2024, totaled $29.5 million compared to $37.8 million on December 31, 2023. As of March 31, 2024 the Company had $125.0 million in borrowings outstanding under its four year $150.0 million Financing Agreement.
Business Outlook
The Company is providing updated 2024 full year guidance as follows:
Conference Call
Orthofix will host a conference call today at 8:30 AM Eastern time to discuss the Company's financial results for the quarter ended March 31, 2024. Interested parties may access the conference call by dialing (888) 330-2508 in the U.S., and (240) 789-2735 in all other locations, and referencing the access code 9556380. A replay of the call will be available for three weeks by dialing (800) 770-2030 in the U.S., and (647) 362-9199 in all other locations, and entering the access code 9556380. A webcast of the conference call may be accessed at ir.Orthofix.com.
About Orthofix
Orthofix is a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions and a leading surgical navigation system. Its products are distributed in more than 60 countries worldwide.
The Company is headquartered in Lewisville, Texas and has primary offices in Carlsbad, CA, with a focus on spine and biologics product innovation and surgeon education, and Verona, Italy, with an emphasis on product innovation, production, and medical education for orthopedics. The combined company’s global R&D, commercial and manufacturing footprint also includes facilities and offices in Irvine, CA, Toronto, Canada, Sunnyvale, CA, Maidenhead, UK, Munich, Germany, Paris, France, and São Paulo, Brazil. For more information, please visit www.orthofix.com.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. Forward-looking statements in this communication include the Company's expectations regarding net sales and adjusted EBITDA for the year ended December 31, 2024. Forward-looking statements are not guarantees of our future performance, are based on our current expectations and assumptions regarding our business, the economy and other future conditions, and are subject to risks, uncertainties and changes in circumstances that are difficult to predict, including the risks described in Part I, Item 1A under the heading Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), and in Part II, Item 1A under the heading Risk Factors in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. Factors that could cause future results to differ from those expressed by forward-looking statements include, but are not limited to, (i) our ability to maintain operations to support our customers and patients in the near-term and to capitalize on future growth opportunities, (ii) risks associated with acceptance of surgical products and procedures by surgeons and hospitals, (iii) development and acceptance of new products or product enhancements, (iv) clinical and statistical verification of the benefits achieved via the use of our products, (v) our ability to adequately manage inventory, (vi) our ability to recruit and retain management and key personnel, and (vii) the other risks and uncertainties more fully described in our periodic filings with the Securities and Exchange Commission (the “SEC”). As a result of these various risks, our actual outcomes and results may differ materially from those expressed in these forward-looking statements.
This list of risks, uncertainties, and other factors is not complete. We discuss some of these matters more fully, as well as certain risk factors that could affect our business, financial condition, results of operations, and prospects, in reports we file from time-to-time with the SEC, which are available to read at www.sec.gov. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Further, any forward-looking statement speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. We undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise, except as required by law.
The Company is unable to provide expectations of GAAP income (loss) before income taxes, the closest comparable GAAP measures to adjusted EBITDA (which is a non-GAAP measure), on a forward-looking basis because the Company is unable to predict without unreasonable efforts the ultimate outcome of matters (including acquisition-related expenses, accounting fair value adjustments, and other such items) that will determine the quantitative amount of the items excluded in calculating adjusted EBITDA, which items are further described in the reconciliation tables and related descriptions below. These items are uncertain, depend on various factors, and could be material to the Company’s results computed in accordance with GAAP.
ORTHOFIX MEDICAL INC.
Condensed Consolidated Statements of Operations
Three Months Ended
March 31,
(U.S. Dollars, in thousands, except share and per share data)
2024
2023
(Unaudited)
Net sales
$
188,608
$
175,204
Cost of sales
61,366
64,875
Gross profit
127,242
110,329
Sales and marketing
100,043
93,791
General and administrative
31,648
48,811
Research and development
19,492
23,307
Acquisition-related amortization and remeasurement
5,396
4,134
Operating loss
(29,337
)
(59,714
)
Interest expense, net
(4,558
)
(1,289
)
Other income (expense), net
(1,274
)
676
Loss before income taxes
(35,169
)
(60,327
)
Income tax expense
(851
)
(611
)
Net loss
$
(36,020
)
$
(60,938
)
Net loss per common share:
Basic
$
(0.95
)
$
(1.71
)
Diluted
(0.95
)
(1.71
)
Weighted average number of common shares (in millions):
Basic
37.7
35.7
Diluted
37.7
35.7
ORTHOFIX MEDICAL INC.
Condensed Consolidated Balance Sheets
(U.S. Dollars, in thousands, except par value data)
March 31, 2024
December 31, 2023
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
26,964
$
33,107
Restricted Cash
2,500
4,650
Accounts receivable, net of allowances of $8,398 and $7,130, respectively
125,617
128,098
Inventories
219,076
222,166
Prepaid expenses and other current assets
24,821
32,422
Total current assets
398,978
420,443
Property, plant, and equipment, net
158,132
159,060
Intangible assets, net
112,761
117,490
Goodwill
194,934
194,934
Other long-term assets
41,245
33,388
Total assets
$
906,050
$
925,315
Liabilities and shareholders’ equity
Current liabilities
Accounts payable
$
57,147
$
58,357
Current portion of long-term debt
3,125
1,250
Current portion of finance lease liability
724
708
Other current liabilities
89,625
104,908
Total current liabilities
150,621
165,223
Long-term debt
115,071
93,107
Long-term portion of finance lease liability
18,345
18,532
Other long-term liabilities
51,698
49,723
Total liabilities
335,735
326,585
Contingencies
Shareholders’ equity
Common shares $0.10 par value; 100,000 shares authorized; 37,410 and 37,165 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
3,741
3,717
Additional paid-in capital
753,398
746,450
Accumulated deficit
(186,164
)
(150,144
)
Accumulated other comprehensive loss
(660
)
(1,293
)
Total shareholders’ equity
570,315
598,730
Total liabilities and shareholders’ equity
$
906,050
$
925,315
ORTHOFIX MEDICAL INC. Non-GAAP Financial Measures
The following tables present reconciliations of various financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), to various non-GAAP financial measures that exclude (or in the case of free cash flow, include) items specified in the tables. The GAAP measures shown in the tables below represent the most comparable GAAP measure to the applicable non-GAAP measure(s) shown in the table. For further information regarding the nature of these exclusions, why the Company believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding this press release filed today with the SEC available on the SEC's website at www.sec.gov and on the “Investors” page of the Company’s website at www.orthofix.com.
Adjusted Gross Profit and Adjusted Gross Margin
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Gross profit
$
127,242
$
110,329
Share-based compensation expense
537
471
SeaSpine merger-related costs
1,303
703
Strategic investments
65
180
Acquisition-related fair value adjustments
3,047
11,636
Amortization/depreciation of acquired long-lived assets
318
—
Medical device regulation
—
629
Adjusted gross profit
$
132,512
$
123,948
Adjusted gross margin
70.3
%
70.7
%
Adjusted EBITDA
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Loss before income taxes
$
(35,169
)
$
(60,327
)
Interest expense, net
4,558
1,289
Depreciation and amortization
14,862
12,670
Share-based compensation expense
8,800
13,020
Foreign exchange impact
1,588
(583
)
SeaSpine merger-related costs
4,520
20,740
Strategic investments
120
661
Acquisition-related fair value adjustments
4,217
11,636
Litigation and investigation costs
2,260
469
Succession charges
2,210
—
Medical device regulation
—
3,629
All other
(301
)
—
Adjusted EBITDA
$
7,665
$
3,204
Adjusted EBITDA as a percentage of net sales
4.1
%
1.8
%
Cash Flow and Free Cash Flow
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net cash from operating activities
$
(18,595
)
$
(34,020
)
Net cash from investing activities
(10,867
)
17,084
Net cash from financing activities
21,453
15,983
Effect of exchange rate changes on cash
(284
)
221
Net change in cash and cash equivalents
$
(8,293
)
$
(732
)
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net cash from operating activities
$
(18,595
)
$
(34,020
)
Capital expenditures
(10,817
)
(11,835
)
Free cash flow
$
(29,412
)
$
(45,855
)
Reconciliation of Non-GAAP Financial Measures to Reported Operating Expenses
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net sales
$
188,608
$
175,204
Sales and marketing, as reported
100,043
93,791
Reconciling items impacting sales and marketing:
Strategic investments
(2,219
)
(2,099
)
Litigation and investigation costs
—
(105
)
Medical device regulation
—
(5
)
Amortization/depreciation of acquired long-lived assets
(178
)
—
Sales and marketing, as adjusted
$
97,646
$
91,582
Sales and marketing as a percentage of net sales, as adjusted
51.8
%
52.3
%
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net sales
$
188,608
$
175,204
General and administrative, as reported
31,648
48,811
Reconciling items impacting general and administrative:
Strategic investments
(1,211
)
(17,298
)
Amortization/depreciation of acquired long-lived assets
(70
)
—
Litigation and investigation costs
(2,260
)
(364
)
Succession charges
(2,210
)
—
General and administrative, as adjusted
$
25,897
$
31,149
General and administrative as a percentage of net sales, as adjusted
13.7
%
17.8
%
Three Months Ended March 31,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net sales
$
188,608
$
175,204
Research and development, as reported
19,492
23,307
Reconciling items impacting research and development:
Strategic investments
(236
)
(1,884
)
Medical device regulations
—
(2,990
)
Research and development, as adjusted
$
19,256
$
18,433
Research and development as a percentage of net sales, as adjusted
10.2
%
10.5
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240507853926/en/
Company Contact Louisa Smith, Gilmartin Group ir@orthofix.com
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