Orthopediatrics Corp. · NASDAQ:KIDS
Orthopediatrics — Investor Presentation (May 2023)
32 slides from Orthopediatrics's investor presentation, May 16, 2023
Slide 1: 2023 Investor Presentation
2023 Investor Presentation www.OrthoPediatrics.com
Slide 2: Disclaimer: Forward-Looking Statements
22 0 2 3 / / Disclaimer Forward-Looking Statements All statements, other than statements of historical facts, contained in this quarterly report, including statements regarding our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our
Slide 3: ~650,000 pediatric patients treated since inception
32 0 2 3 / / pediatric patients treated since inception ~ 650,000 OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions 1 1 Includes patients treated by MD Orthopaedics (MDO) as well as Pega Medical since inception
Slide 4: Historical Challenges of Pediatric Orthopedics
01 Children’s unique clinical conditions Existing solutions are re-purposed from adult implants Limited development of new technologies No specialized sales force in Pediatric Orthopedics Limited industry support of clinical education 02 03 04 05 42 0 2 3 / / Historical Challenges of Pediatric Ortho
Slide 5: OrthoPediatrics Solution
52 0 2 3 / / OrthoPediatrics Solution 01 02 03 04 05 Product development focused exclusively on pediatric patients Broadest pediatric specific portfolio in the industry Delivering first in market novel surgical solutions Only global commercial channel to market Leading provider of surgeon clinical e
Slide 6: Total Addressable Market – $3.9B
62 0 2 3 / / Total Addressable Market – $3.9B Competitive Dynamics $609M Surgical Implants $334M Scoliosis Fusion $75M Scoliosis Non-Fusion $303M Specialty Bracing $249M Sports Medicine $162M Smart Implants Large incumbents repurpose adult implants Require specialized sales force Lack of focus on pe
Slide 7: Only Focused Pediatric Orthopedic Company
72 0 2 3 / / Only Focused Pediatric Orthopedic Company Consistent 20%+ Growth Since Inception 1 Excluding COVID-impacted 2020 49 unique pediatric systems Consistent cadence of innovative product launches Expanding suite of enabling technologies Internal R&D, acquisitions, and partnerships Only globa
Slide 8: Strategic Pillars
82 0 2 3 / / Strategic Pillars 02 Provide a broad product portfolio uniquely designed to treat children, surround pediatric orthopedic surgeons covering their needs 04 Expand addressable market through aggressive investment in R&D and select M&A opportunities 05 Train next generation of pediatric or
Slide 9: Focus on High-Volume Children's Hospitals
92 0 2 3 / / Comments ~1,520 Fellowship Trained Pediatric Surgeons Majority of Pediatric Centers are Teaching Hospitals Centers Treat Most Complex Pediatric Conditions 01 02 03 $378M Surgical Implants $207M Scoliosis Fusion $68M Scoliosis Non-Fusion $197M Specialty Bracing $82M Sports Medicine 300 U
Slide 10: Broad Product Portfolio: Pre-IPO
102 0 2 3 / / Pre-IPO Transitioned from Early Entry to Clinically Significant Cannulated Screws Response 5.5/6.0mm Fusion System PediPlate Physeal Tethering Hip Systems LCB / LPF ACL System BandLoc 5.5/6.0mm Banding Clavicle Plating System PediFlexPediLoc Femur PediLoc Tibia PediFragLocking Proximal
Slide 11: Accelerating Sales Growth Post-IPO
112 0 2 3 / / Accelerating Sales Growth Post-IPO Through Strategic Investment and Innovation $37.3 $45.6 $57.6 $72.6 $71.1 $98.0 $122.3 2016 2017 2018 2019 2020 2021 2022 Total Revenue ($M) 2016 2022 CAGR U.S. Independent Sales Consultants 90 197 14% Instrument Set Deployments $7M $20M 20% Unique Pe
Slide 12: Post-IPO moved from Clinically Significant to Disruptive
122 0 2 3 / / Post-IPO moved from Clinically Significant to Disruptive 202020192017 2018 FireFly Patient Specific Navigation Guides 2021 DFOS Distal Femoral Osteotomy System MPFL System Wrist Fusion Plates PNP Pediatric Nailing Platform Response 4.5/5.0mm Fusion System Orthex External Fixation Syste
Slide 13: Strategic Acquisitions & Partnerships
132 0 2 3 / / Strategic Acquisitions & Partnerships Partnership Acquisition 202020192017 2022 04 Expand Market with M&A 2021 Gold Standard in Club Foot Bracing 2022
Slide 14: Acquisition: MD Orthopaedics
142 0 2 3 / / Terms: • Closed April 1, 2022 • $8.2M cash, $8.9M shares, $2.5M RSA MD Orthopaedics • Develops, manufactures and sells the patented Mitchell Ponseti Ankle-Foot Orthosis (AFO) to treat clubfoot • Dr. Ignacio Ponseti developed the gold standard for treating clubfoot which has >90% succes
Slide 15: Acquisition: Pega Medical
152 0 2 3 / / Terms: • Closed July 5, 2022 • $31M cash, $2M stock Pega Medical • Developed the Fassier-Duval Telescopic Intramedullary Nail System (FD Nail) • FD Nail is cutting-edge implant designed to treat bone deformities in children with Osteogenesis Imperfecta without disrupting their normal g
Slide 16: ApiFix and Orthex
162 0 2 3 / / ApiFix • Disruptive non-fusion technology • Viable alternative to failed bracing & spinal fusion • Posterior, minimally invasive approach • Motion preserving capabilities • Granted FDA HDE approval Orthex • Disruptive software complements ex-fix frame • Expands addressable market • Ser
Slide 17: FireFly Navigation Guides and 7D Surgical
172 0 2 3 / / FIREFLY® Pedicle Screw Navigation Guides FireFly S2/Alar Unique patient specific 3D printed bone models and drill guides, can be used with any Spinal Deformity Correction system. • 99.7% screw placement accuracy • Preoperative concierge surgical planning drives intraoperative efficienc
Slide 18: 7D Real World Experience
182 0 2 3 / / 7D Real World Experience Chris Comstock, MD & Eric Wait, MD Driscoll Children’s Hospital First Pediatric Deformity Installation in US I have noticed we are seeing shorter stays for our patients with complex spinal surgeries since we have started using the 7D technology. It used to be c
Slide 19: Physician Education and Awareness
192 0 2 3 / / Physician Education and Awareness OP Hands-on sales training and support • Annually invests 3% of sales on clinical education • Conducts >300 product/training sessions per year Continuous education • Major Sponsor of the prominent pediatric orthopedic societies Market development • Fos
Slide 20: Catalysts & Pipeline
202 0 2 3 / / Catalysts & Pipeline Enabling Technologies Scoliosis • Orthex surgical software • Firefly patient-specific planning/guides • 7D spinal interoperative navigation • PediPortal app • Medtech Concepts – Acquired May 1, 2023 • Advancing non-fusion treatment • Early-onset scoliosis innovatio
Slide 21: 49 Differentiated Pediatric Systems Driving Growth
212 0 2 3 / / Trauma & Deformity +17% CAGR 14 36 2016 2022 $26.8 $85.1 2016 2022 Pediatric Systems Revenue +21% CAGR Scoliosis >2X Growth 3 8 2016 2022 $9.3 $33.4 2016 2022 Pediatric Systems Revenue >3.6X Growth 2022 Revenue by Product Family Trauma & Deformity Scoliosis Sports Medicine70% of Revenu
Slide 22: Strong History of Y/Y Growth
222 0 2 3 / / $0.6 $3.0 $7.1 $10.2 $16.1 $19.6 $23.7 $31.0 $37.3 $45.6 $57.6 $72.6 $71.1 $98.0 $122.3 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Strong History of Y/Y Growth ($M) 400% 137% 44% 58% 22% 21% 31% 20% 22% 26% 26% -2% 38% U.S. International 1 25% 1 Imp
Slide 23: Category Revenue Summary
232 0 2 3 / / $19.3 $22.5 $26.8 $32.8 $39.7 $49.4 $47.7 $65.8 $85.1 $3.6 $7.4 $9.4 $11.6 $16.7 $21.5 $20.7 $28.0 $33.4 $0.8 $1.1 $1.1 $1.2 $1.2 $1.7 $2.7 $4.2 $3.8 $0 $20 $40 $60 $80 $100 $120 $140 2014 2015 2016 2017 2018 2019 2020 2021 2022 Re ve nu e ($ in M ill io ns ) Trauma & Deformity Scolios
Slide 24: Revenue Seasonality
242 0 2 3 / / Seasonality Drives Stronger Performance in Summer Months and Holiday Periods 21% 26% 27% 25% 20% 25% 29% 26% 23% 19% 31% 27% 22% 27% 26% 25% 19% 27% 29% 25% 21% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Re ve nu e as % o f T ot al Y ea r 2018 2019 2020 2021 2022 Re
Slide 25: Income Statement Summary
252 0 2 3 / / ($ in Millions) FY 2020 FY 2021 FY2022 Revenue $71.1 $98.0 $122.3 Growth % (2%) 38% 25% Gross profit $55.0 $73.4 $90.7 Margin % 77% 75% 74% Operating expenses $81.8 $91.4 $116.1 Operating loss ($26.8) ($18.0) ($25.4) Net (loss) income ($32.9) ($16.2) $1.3 EPS1 ($1.82) ($0.84) $0.06 1Q
Slide 26: Organic Revenue Reconciliation
262 0 2 3 / / Organic Revenue Reconciliation Three Months Ended March 31, Product Sales by geography 2023 2022 As reported: U.S. $23.8 $18.2 International $7.8 $5.2 Less impact from acquisitions: U.S. $2.6 - International $2.3 - Organic revenue: U.S. $21.2 $18.2 International $5.5 $5.2 Total Organic
Slide 27: Adjusted EBITDA Reconciliation
272 0 2 3 / / Adjusted EBITDA Reconciliation Three Months Ended March 31, 2023 2022 Net income (loss) ($6.8) ($9.1) Interest expense, net (0.2) 0.6 Other income (expense) (0.3) (0.1) Provision for income tax (benefit) (0.6) (0.3) Depreciation and amortization 3.8 3.0 Stock-based compensation 2.1 1.5
Slide 28: Adjusted EPS Reconciliation
282 0 2 3 / / Adjusted EPS Reconciliation Three Months Ended March 31, 2023 2022 Earnings (loss) per share, diluted (GAAP) ($0.30) ($0.47) Accretion of interest attributable to acquisition installment payable 0.02 0.02 Fair value adjustment of contingent consideration (0.03) 0.13 Acquisition related
Slide 29: Balance Sheet
292 0 2 3 / / Balance Sheet Assets Cash & short-term investments 109.2 Account receivable 26.8 Inventory (net) 84.9 Other current assets 4.0 Total Current Assets 225.0 PP&E (net) 36.9 Intangibles and goodwill 164.4 Total Assets 426.3 Liabilities Accounts payable 16.7 Debt 0.9 Accrued comp. & other l
Slide 30: 2023 Guidance
302 0 2 3 / / 2023 Guidance FY2023 Revenue $148.0 to $151.0 Adjusted EBITDA $3.0 to $4.0 FY2023 2023 Total Revenue Growth % 21% to 23% MD Ortho and Pega Medical contribution1 $7.0 Organic Revenue Growth % 15% to 18% Set Deployment ~$25 Adjusted EPS2 ~($0.95) Assumptions ($ in Millions, except per sh
Slide 31: Investment Summary
312 0 2 3 / / Investment Summary Only diversified company focused exclusively on pediatric orthopedics Large, underpenetrated market opportunity in pediatrics Highly concentrated customer base with targeted commercial strategy Broad product portfolio with innovative solutions Only provider committed
Slide 32: 2850 Frontier Drive Warsaw, IN 465852 ph: 574.268.6379 or 877.268.6339 fax: 574.268.6302 www.OrthoPediatrics.com2
2850 Frontier Drive Warsaw, IN 465852 ph: 574.268.6379 or 877.268.6339 fax: 574.268.6302 www.OrthoPediatrics.com2 0 2 3 / /