Orthopediatrics Corp. · NASDAQ:KIDS
Orthopediatrics — Investor Presentation (August 2021)
30 slides from Orthopediatrics's investor presentation, Aug 12, 2021
Slide 1: OrthoPediatrics Corp. August 2021
David Bailey, President & CEO Fred Hite, COO & CFO Mark Throdahl, Executive Chairman OrthoPediatrics Corp. August 2021
Slide 2: Disclaimer
Disclaimer Forward‐Looking Statements This presentation includes "forward‐looking statements" within the meaning of U.S. federal securities laws. You can identify forward‐looking statements by the use of words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "could," "believ
Slide 3: Highlights
Highlights Diversified medical device company focused exclusively on pediatric orthopedics Protected market opportunity: $1.5 billion U.S., $3.3 billion globally (2020 estimates) High U.S. procedure concentration: <300 hospitals and ~1,400 surgeons Focused call point: pediatric orthopedic surgeons a
Slide 4: OP Today
OP Today Treated >215,000 patients since inception 36 surgical systems; ~8,125 SKUs; strong pipeline 120 direct employees; 182 focused sales reps2 Global sales organization focused on pediatric orthopedic surgeons in 45 countries1 102 issued patents; 66 patent applications2 Average FDA approval time
Slide 5: Our Key Idea
Our Key Idea Address orthopedic industry’s lack of focus on product development, clinical education, and sales presence Implants and instruments avoid complications of re‐purposed adult products Product development in collaboration with leading pediatric orthopedic surgeons Dedicated sales support a
Slide 6: Large and Focused Market
38% 62% Large and Focused Market Current products target three of the largest categories in Pediatric Orthopedics Pipeline products underway to expand addressable market Trauma & Deformity $609M OP’S $3.3 Billion Current Addressable Global Market1 $1.5 Billion U.S. Addressable Market1 Procedures (%)
Slide 7: Product Line & Growth Diversification
Product Line & Growth Diversification $71.1 million sales in 2020, decreased 2% vs prior year ($2.7) million Dec ’20 revenue reduction impacted 2020 growth by negative 4% $72.6 million sales in 2019, increasing 26% Well diversified product sales and sources of growth All products have comparable gro
Slide 8: A Proven Strategy Since 2011
A Proven Strategy Since 2011 8 Deploy Instrument Sets Sales Focus on Teaching Institutions and High Volume Hospitals Expand Addressable Procedures Expand Clinical Education Programs Goals Accelerate sales growth Develop and acquire novel technologies
Slide 9: New Systems & Product Launches (2017-2018)
9 New Systems & Product Launches (2017‐2018) FIREFLY® Pedicle Screw Navigation Guides (Complementary to RESPONSE Spine System) Tr au m a & D ef or m ity Sc ol io si s Titanium PediPlates® System (Expands physeal tethering offering) Clavicle Plate System (First pediatric specific system) Wrist Fusion
Slide 10: Internal Developments & Select Acquisitions
10 Internal Developments & 2 Select Acquisitions BandLoc DUO System Tr au m a & D ef or m ity Sc ol io si s Launched Feb’19 PediFoot (First pediatric foot system) Launched Nov’19 RESPONSE™ Neuromuscular System Neuromuscular Launched Jun’21 PediFoot Expansion Launching 2021 Next Generation Cannulated
Slide 11: Strong Pipeline Expanding Our Addressable Market
Knee (Sports Medicine) Strong Pipeline Expanding Our Addressable Market Spine Foot & Ankle Hip & Long Bone CMF Proximal Humerus Elbow Hand & Wrist Pelvis Clavicle Rib OP Today OP Tomorrow Now Under Development Demonstrated ability to expand portfolio to full array of pediatric surgeries 11 Growing R
Slide 12: Leading Edge Systems in Development
Leading Edge Systems in Development 12 Emerging surgical trends not being pursued by major spine companies Intervention in patients as young as 10 Reversible, non‐fusion procedures Developing IP portfolio Working with panel of leading surgeons Proof of concept established in 2018 with substantial de
Slide 13: Sales Coverage in the U.S. and Countries
Sales Coverage in the U.S. and 45 Countries United States 80.1% of 1H 2021 Revenue 40 Independent Sales Agencies, most of which are exclusive* International 19.9% of 1H 2021 Revenue 14 Independent Sales Agencies + 42 Stocking Distributors* OP’s U.S. business shifted from hybrid model to 100% indirec
Slide 14: Vilex Acquisition Transaction Details
Vilex Acquisition 14 Transaction Details Acquisition: In June 2019 OP purchased Vilex1 and its Orthex Hexapod2 system with proprietary point‐and‐click planning software, for $60 million ($50 million cash + $10 million shares) Divestiture: In December 2019 OP sold the adult assets and Orthex license
Slide 15: Orthex Advantages
Orthex Advantages 15 Disruptive Technology Construct allows 90° angulation Unique calibrated structs and HA‐coated pins Patented point and click software Significantly simplifies surgery planning and subsequent alignments Dror Paley, MD – Pediatric orthopedic KOL Introduced Ilizarov method in U.S. D
Slide 16: ApiFix Acquisition Transaction Details
ApiFix Acquisition 16 Transaction Details Acquisition: In April 2020, OP purchased ApiFix1 and its MID‐C minimally invasive deformity correction system, for 934,768 shares of common stock and $2 million in cash paid at closing, plus milestone payments and an earnout over a period of four years Benef
Slide 17: A Game-Changing Surgical Option
A Game‐Changing Surgical Option ApiFix is a Viable Alternative to Failed Bracing and Spinal Fusion for the Treatment of Progressive Scoliosis (AIS) Fusion Surgery Curves > 50º Exercise Curves < 25º Brace Curves 25º- 40º ApiFix System Curves 35º - 60º 17
Slide 18: ApiFix Procedure Advantages
• Viable alternative to failed bracing and spinal fusion with motion‐preserving technique ‐ Self‐adjusting rod and novel polyaxial joints • Least invasive surgical solution ‐ Placed posteriorly and unilaterally on the concave aspect of the curvature ‐ No thoracic surgeon; no need to collapse the lun
Slide 19: Competitive Landscape
Product breadth Surgeon relationships Sales and distribution network Clinical education programs Pediatric brand equity Reputation with pediatric orthopedic societies Dynamic culture New Competitors Would Face Formidable Obstacles “The ship has sailed.” Competitive Landscape 19
Slide 20: What Does Category Leadership Mean?
What Does Category Leadership Mean? Surgeon relationships and clinical education Relationships with surgeons who use entire portfolio Major provider of clinical education Leading supporter of surgical societies Custom instruments Attractive growth and margin profile Consistent growth since inception
Slide 21: Financial Review
Financial Review
Slide 22: Consistent 20+% Revenue Growth Since Inception
Consistent 20+% Revenue Growth Since Inception $0.6 $3.0 $6.7 $9.3 $13.3 $15.8 $18.4 $24.9 $28.8 $34.9 $43.5 $55.1 $63.0 $97.0 $0.4 $0.9 $2.8 $3.9 $5.3 $6.1 $8.5 $10.7 $14.1 $17.5 $8.1 $101.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 US Intl 2021 Guidance $7.1 $10.2 $16.1
Slide 23: Growth by Geography
19% 21% 35% 30% 30% ‐12% 17% 26% 26% 79% 28% 20% 16% 32% ‐32% ‐67% ‐34% ‐78% 56% 243% 21% 21% 31% 30% 12% ‐25% 7% ‐0.1% 31% 96% 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q30 4Q20 1Q21 2Q21 Domestic International Total Growth by Geography 23
Slide 24: Category Revenue Summary
$19.3 $22.5 $26.8 $32.8 $39.7 $49.4 $47.7 $3.6 $7.4 $9.4 $11.6 $16.7 $21.5 $20.7 $0.8 $1.1 $1.1 $1.2 $1.2 $1.7 $2.7 $0 $10 $20 $30 $40 $50 $60 $70 $80 2014 2015 2016 2017 2018 2019 2020 Re ve nu e ($ in M ill io ns ) Trauma & Deformity Scoliosis Sports Medicine/Other Category Revenue Summary 24 $9.2
Slide 25: Revenue Seasonality
Revenue Seasonality Seasonality Drives Stronger Performance in Summer Months and Holiday Periods 25 22% 26% 27% 25% 21% 26% 27% 26% 21% 26% 27% 25% 20% 25% 29% 26% 23% 19% 31% 27% 0% 5% 10% 15% 20% 25% 30% 35% 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q
Slide 26: Income Statement Summary
Income Statement Summary 26 ($ in Millions) 1 Net loss per share attributable to common stockholders – basic and diluted FY 2018 FY 2019 FY 2020 Revenue $57.6 $72.6 $71.1 Growth % 26% 26% (.01%) Gross Profit $42.7 $54.6 $55.0 Margin % 74% 75% 77% Operating Expenses $52.2 $63.7 $81.8 Operating Loss (
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 27 Three Months Ended June 30, 2021 2020 Net loss from continuing operations ($3.8) ($9.4) Interest expense, net 0.6 1.4 Other expense (0.4) 0.1 Provision for income tax (benefit) (0.3) ‐ Depreciation and amortization 2.6 1.9 Stock‐based compensation 1.4 2.5 Fair value
Slide 28: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation 28 Three Months Ended June 30, 2021 2020 Earnings (loss) per share, diluted (GAAP) ($0.19) ($0.54) Accretion of interest attributable to acquisition installment payments 0.03 0.05 Fair value adjustment of contingent consideration 0.05 0.05 Non‐recurring professional fees
Slide 29: Balance Sheet
Balance Sheet 29 Assets Cash $67.2 Accounts receivable 19.2 Inventory (net) 56.4 Other current assets 2.6 PP&E (net) 28.2 Intangibles and Goodwill 120.2 Other intangible assets 13.8 Total Assets $307.7 ($ in Millions) As of June 30, 2021 Liabilities Accounts payable $10.1 Debt 1.1 Accrued expenses 5
Slide 30: Summary
Summary Surgeon relationships and clinical education Attractive growth and margin profile Robust organic growth opportunities Broadest, most innovative product offering 30
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