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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 | |
---|---|---|---|---|---|---|---|---|---|---|
1.06 | 6.49% | 17.40 | 11.52 | 17.74 | 17.55 | 15.91 | 16.16 | 417,170 | 22:30:00 |
Orthofix Medical Inc. (NASDAQ:OFIX) today reported its financial results for the second quarter ended June 30, 2024 and increased its full-year 2024 financial guidance.
Recent Highlights
Second quarter net sales were $198.6 million, an increase of 6% on a reported and constant currency basis. Net loss was $(33.4) million and earnings per share ("EPS") was $(0.88) on a reported basis, representing an improvement of 18% when compared to the prior year period. Non-GAAP adjusted EBITDA was $16.6 million for the second quarter, representing adjusted EBITDA margin expansion of 310 basis points over the prior year period.
“We delivered another strong quarter driven by successful execution of our key growth priorities,” said Massimo Calafiore, President and Chief Executive Officer. “Highlights in the quarter included notable revenue growth across each of our business segments where our performance was led primarily by strength in our U.S. markets, including Bone Growth Therapies, which grew 12%, and further highlights the benefit of cross-selling in our integrated spine channel. In addition, we delivered growth of 12% in U.S. Spine fixation, more than twice the market rate. Based on continued positive momentum, the strength of our differentiated and expanding product portfolio, which continues to win share, and our confidence in sustainable growth trends, we are raising our full-year net sales and adjusted EBITDA guidance. We also are on track to achieve positive free cash flow for the second half of this year, much earlier than we originally anticipated.”
1
Spine fixation is comprised of the Company's Spinal Implants product category, excluding motion preservation product offerings
Financial Results Overview
Second Quarter 2024 Net Sales and Financial Results
The following table provides net sales by major product category by reporting segment:
Three Months Ended June 30,
(Unaudited, U.S. Dollars, in millions)
2024
2023
Change
Constant Currency Change
Bone Growth Therapies
$
59.1
$
52.7
12.3
%
12.3
%
Spinal Implants, Biologics and Enabling Technologies
108.9
105.3
3.4
%
3.4
%
Global Spine
168.0
158.0
6.4
%
6.4
%
Global Orthopedics
30.6
29.0
5.3
%
6.3
%
Net sales
$
198.6
$
187.0
6.2
%
6.4
%
Gross margins were 67.8% for the quarter and were 71.3% on a non-GAAP adjusted basis.
Net loss was $(33.4) million, or $(0.88) per share, compared to net loss of $(39.4) million, or $(1.07) per share in the prior year period. Non-GAAP adjusted EBITDA was $16.6 million, or 8.4% of net sales, compared to non-GAAP adjusted EBITDA of $9.9 million, or 5.3% of net sales, in the prior year period.
Liquidity
Cash, cash equivalents, and restricted cash on June 30, 2024, totaled $28.9 million compared to $29.5 million on March 31, 2024.
Business Outlook
The Company is increasing its 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 June 30, 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, adjusted EBITDA, and free cash flow 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 June 30, 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
Six Months Ended
June 30,
June 30,
(Unaudited, U.S. Dollars, in thousands, except share and per share data)
2024
2023
2024
2023
Net sales
$
198,620
$
187,016
$
387,228
$
362,220
Cost of sales
63,871
67,465
125,237
132,340
Gross profit
134,749
119,551
261,991
229,880
Sales and marketing
100,224
99,249
200,267
193,040
General and administrative
33,994
34,177
65,642
82,988
Research and development
18,049
19,424
37,541
42,731
Acquisition-related amortization and remeasurement
7,388
3,333
12,784
7,467
Operating loss
(24,906
)
(36,632
)
(54,243
)
(96,346
)
Interest expense, net
(4,943
)
(1,266
)
(9,501
)
(2,555
)
Other income (expense), net
(2,510
)
(20
)
(3,784
)
656
Loss before income taxes
(32,359
)
(37,918
)
(67,528
)
(98,245
)
Income tax expense
(1,084
)
(1,508
)
(1,935
)
(2,119
)
Net loss
$
(33,443
)
$
(39,426
)
$
(69,463
)
$
(100,364
)
Net loss per common share:
Basic
$
(0.88
)
$
(1.07
)
$
(1.84
)
$
(2.77
)
Diluted
(0.88
)
(1.07
)
(1.84
)
(2.77
)
Weighted average number of common shares (in millions):
Basic
38.0
36.8
37.8
36.3
Diluted
38.0
36.8
37.8
36.3
ORTHOFIX MEDICAL INC.
Condensed Consolidated Balance Sheets
(U.S. Dollars, in thousands, except par value data)
June 30, 2024
December 31, 2023
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
26,366
$
33,107
Restricted Cash
2,500
4,650
Accounts receivable, net of allowances of $8,368 and $7,130, respectively
125,361
128,098
Inventories
210,040
222,166
Prepaid expenses and other current assets
21,798
32,422
Total current assets
386,065
420,443
Property, plant, and equipment, net
154,111
159,060
Intangible assets, net
108,310
117,490
Goodwill
194,934
194,934
Other long-term assets
38,578
33,388
Total assets
$
881,998
$
925,315
Liabilities and shareholders’ equity
Current liabilities
Accounts payable
$
50,362
$
58,357
Current portion of long-term debt
4,688
1,250
Current portion of finance lease liability
734
708
Other current liabilities
100,183
104,908
Total current liabilities
155,967
165,223
Long-term debt
113,315
93,107
Long-term portion of finance lease liability
18,160
18,532
Other long-term liabilities
48,552
49,723
Total liabilities
335,994
326,585
Contingencies
Shareholders’ equity
Common shares $0.10 par value; 100,000 shares authorized; 38,039 and 37,165 issued and outstanding as of June 30, 2024, and December 31, 2023, respectively
3,804
3,717
Additional paid-in capital
764,538
746,450
Accumulated deficit
(219,607
)
(150,144
)
Accumulated other comprehensive loss
(2,731
)
(1,293
)
Total shareholders’ equity
546,004
598,730
Total liabilities and shareholders’ equity
$
881,998
$
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 June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Gross profit
$
134,749
$
119,551
$
261,991
$
229,880
Share-based compensation expense
497
482
1,034
953
SeaSpine merger-related costs
3,115
3,782
4,418
4,486
Strategic investments
63
29
128
210
Acquisition-related fair value adjustments
3,047
9,449
6,094
21,085
Amortization/depreciation of acquired long-lived assets
209
544
527
544
Medical device regulation
—
41
—
669
Adjusted gross profit
$
141,680
$
133,878
$
274,192
$
257,827
Adjusted gross margin
71.3
%
71.6
%
70.8
%
71.2
%
Adjusted EBITDA
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Net loss
$
(33,443
)
$
(39,426
)
$
(69,463
)
$
(100,364
)
Income tax expense (benefit)
1,084
1,508
1,935
2,119
Interest expense, net
4,943
1,266
9,501
2,555
Depreciation and amortization
14,032
13,327
28,894
25,997
Share-based compensation expense
9,959
13,246
18,759
26,266
Foreign exchange impact
851
(269
)
2,439
(852
)
SeaSpine merger-related costs
5,897
8,206
10,376
28,946
Strategic investments
311
309
431
970
Acquisition-related fair value adjustments
6,117
8,149
10,334
19,785
Interest and loss on investments
1,813
—
1,553
—
Litigation and investigation costs
(277
)
1,291
1,983
1,760
Succession charges
5,346
262
7,556
262
Medical device regulation
—
2,050
—
5,679
Adjusted EBITDA
$
16,633
$
9,919
$
24,298
$
13,123
Adjusted EBITDA as a percentage of net sales
8.4
%
5.3
%
6.3
%
3.6
%
Adjusted Net Income
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Net loss
$
(33,443
)
$
(39,426
)
$
(69,463
)
$
(100,364
)
Share-based compensation expense
9,959
13,246
18,759
26,266
Foreign exchange impact
851
(269
)
2,439
(852
)
SeaSpine merger-related costs
5,967
8,049
10,815
30,353
Strategic investments
371
348
497
1,046
Acquisition-related fair value adjustments
6,117
8,149
10,334
19,785
Amortization/depreciation of acquired long-lived assets
4,648
5,810
9,440
9,944
Litigation and investigation costs
(277
)
1,291
1,983
1,760
Succession charges
5,346
262
7,556
262
Medical device regulation
—
2,055
—
5,689
Interest and loss on investments
1,764
—
1,504
—
Long-term income tax rate adjustment
416
1,224
3,112
3,238
Adjusted net income (loss)
$
1,719
$
739
$
(3,024
)
$
(2,873
)
Cash Flow and Free Cash Flow
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net cash from operating activities
$
(9,611
)
$
(39,536
)
Net cash from investing activities
(20,583
)
4,265
Net cash from financing activities
21,678
21,791
Effect of exchange rate changes on cash
(375
)
387
Net change in cash and cash equivalents
$
(8,891
)
$
(13,093
)
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
Net cash from operating activities
$
(9,611
)
$
(39,536
)
Capital expenditures
(20,533
)
(24,654
)
Free cash flow
$
(30,144
)
$
(64,190
)
Reconciliation of Non-GAAP Financial Measures to Reported Operating Expenses
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Sales and marketing expense, as reported
$
100,224
$
99,249
$
200,267
$
193,040
Reconciling items impacting sales and marketing:
Strategic investments
(1,193
)
(1,422
)
(3,412
)
(3,521
)
Litigation and investigation costs
—
(752
)
—
(857
)
Medical device regulation
—
—
—
(5
)
Amortization/depreciation of acquired long-lived assets
(119
)
(297
)
(297
)
(297
)
Sales and marketing expense, as adjusted
$
98,912
$
96,778
$
196,558
$
188,360
Sales and marketing expense as a percentage of net sales, as adjusted
49.8
%
51.7
%
50.8
%
52.0
%
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
General and administrative expense, as reported
$
33,994
$
34,177
$
65,642
$
82,988
Reconciling items impacting general and administrative:
Strategic investments
(1,623
)
(2,694
)
(2,834
)
(19,992
)
Amortization/depreciation of acquired long-lived assets
(2
)
(336
)
(72
)
(336
)
Litigation and investigation costs
277
(538
)
(1,983
)
(902
)
Succession charges
(5,346
)
(262
)
(7,556
)
(262
)
General and administrative expense, as adjusted
$
27,300
$
30,347
$
53,197
$
61,496
General and administrative expense as a percentage of net sales, as adjusted
13.7
%
16.2
%
13.7
%
17.0
%
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Research and development expense, as reported
$
18,049
$
19,424
$
37,541
$
42,731
Reconciling items impacting research and development:
Strategic investments
(340
)
(490
)
(576
)
(2,374
)
Medical device regulation
—
(2,027
)
—
(5,017
)
Research and development expense, as adjusted
$
17,709
$
16,907
$
36,965
$
35,340
Research and development expense as a percentage of net sales, as adjusted
8.9
%
9.0
%
9.5
%
9.8
%
Reconciliation of Non-GAAP Financial Measures to Reported Non-Operating (Income) Expense
Three Months Ended June 30,
Six Months Ended June 30,
(Unaudited, U.S. Dollars, in thousands)
2024
2023
2024
2023
Non-operating expense
$
7,453
$
1,286
$
13,285
$
1,899
Reconciling items impacting non-operating expense:
Foreign exchange impact
(851
)
269
(2,439
)
852
Strategic investments
—
(15
)
—
(895
)
Interest and (gain) loss on investments
(1,787
)
30
(1,504
)
60
Non-operating expense, as adjusted
$
4,815
$
1,570
$
9,342
$
1,916
Non-operating expense as a percentage of net sales, as adjusted
2.4
%
0.8
%
2.4
%
0.5
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240806732152/en/
Investor Relations Julie Dewey, Chief Investor Relations and Communications Officer JulieDewey@Orthofix.com (209) 613-6945 Media Relations Denise Landry, Vice President, Global Corporate Communications DeniseLandry@Orthofix.com (214) 937-2529
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