OrthoPediatrics Corp (KIDS) Q1 2025 Earnings Call Highlights: Strong Revenue Growth and ...

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Thu, May 8, 2025, 1:31 AM 4 min read

Revenue: $52.4 million in Q1 2025, a 17% increase from Q1 2024.
U.S. Revenue: $40.9 million, a 19% increase from Q1 2024, representing 78% of total revenue.
International Revenue: $11.5 million, an 11% increase from Q1 2024, representing 22% of total revenue.
Trauma and Deformity Revenue: $37.9 million, a 14% increase from the prior year period.
Scoliosis Revenue: $13.7 million, a 34% increase from the prior period.
Gross Profit Margin: 73%, up from 72% in Q1 2024.
Operating Expenses: $49.2 million, an 18% increase from the prior year period.
Adjusted EBITDA: Loss of $0.4 million, over 50% improvement from a loss of $1.1 million in Q1 2024.
Free Cash Flow Usage: $8.4 million, a 36% reduction from the prior year.
Cash and Short-term Investments: $60.8 million at the end of Q1 2025.
Full Year 2025 Revenue Guidance: Increased to $236 million to $242 million, representing 15% to 18% growth.
Full Year Gross Margin Guidance: Expected to be within the range of 72% to 73%.
Adjusted EBITDA Guidance for 2025: $15 million to $17 million.

Warning! GuruFocus has detected 4 Warning Signs with KIDS.

Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

OrthoPediatrics Corp (NASDAQ:KIDS) reported a 17% increase in global revenue for the first quarter of 2025, driven by strong performances in Trauma and Deformity, Scoliosis, and OPSB.
The company received five FDA approvals in the first quarter, including major systems like the VerteGlide system and the 3P Pediatric Plating Platform Hip System.
OrthoPediatrics Corp (NASDAQ:KIDS) reduced its adjusted EBITDA loss by more than half year-over-year and improved free cash flow by 36%.
The company is expanding its OPSB clinics, having entered North Carolina as its fourth territory in 2025, with plans for further expansion.
OrthoPediatrics Corp (NASDAQ:KIDS) increased its full-year revenue guidance to $236 million to $242 million, representing annual growth of 15% to 18%.

Negative Points

International growth was offset by softness in Latin America and lower OUS set sales, which contribute little to profitability.
Operating expenses increased by 18% compared to the prior year period, driven by incremental personnel and increased noncash stock compensation.
The company experienced a decrease in research and development expenses due to the timing of product development third-party invoices.
Despite strong revenue growth, the company still reported an adjusted EBITDA loss of $0.4 million in the first quarter of 2025.
OrthoPediatrics Corp (NASDAQ:KIDS) is managing international business cautiously, particularly in Latin America, to improve cash flow, which may limit aggressive growth in those markets.

Q & A Highlights

Q: Can you discuss the strong performance in the Spine business and the impact of VerteGlide and other EOS products? How is the OPSB business contributing to this growth? A: David Bailey, Chief Operating Officer, explained that the strong quarter in the Scoliosis segment was due to high adoption rates of Scoliosis Fusion surgeons and new accounts, driven by products like ApiFix and 7D placements. The OPSB business is contributing through increased use of specialty bracing products, and the company is the only one treating the entire continuum of scoliosis care.

Q: Why did the low end of the revenue guidance range increase by only $1 million despite a $1.6 million beat? Is there any caution for the rest of the year? A: David Bailey noted that the company remains cautious as they have not yet entered the summer months, which are significant for revenue. They are also managing international business carefully to improve cash flow, particularly in Latin America, which affects how aggressively they pursue orders.

Q: How does the 7D technology impact the adoption of Scoliosis products, and can it be seen as a leading indicator for growth in this segment? A: David Bailey stated that 7D placements have opened new accounts where OrthoPediatrics previously had little presence, leading to growth in RESPONSE Fusion sales. The company is also developing new EOS products that will benefit from navigation, indicating a bright future for the Scoliosis segment.

Q: Can you provide more details on the clinic expansion efforts, particularly in Florida and Colorado, and future plans for expansion? A: David Bailey expressed excitement about the clinic expansion strategy, noting increased throughput in new clinics and plans for further expansion in the second half of 2025. The company aims to dominate the market share in this space over the next 3 to 5 years, with significant opportunities for growth both in the U.S. and internationally.

Q: What is the current status of the eLLi product development and FDA interactions? A: David Bailey shared that the FDA has been cooperative, and the company does not expect a lengthy PMA process. The FDA recognizes the need for the eLLi device, and the company is optimistic about a rational and cost-effective approval pathway, similar to the VerteGlide approval process.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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