Orthopediatrics Corp. · NASDAQ:KIDS
Orthopediatrics — Q2 2020 Earnings Presentation
29 slides from Orthopediatrics's earnings presentation, Aug 6, 2020
Slide 1: OrthoPediatrics Corp.
Mark Throdahl, CEO OrthoPediatrics Corp. Fred Hite, COO & CFO August 2020 Dave Bailey, President
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 Large Market Proprietary Technology Scalable Business Diversified medical device company focused exclusively on pediatric orthopedics Protected market opportunity: $1.4 billion U.S., $3.2 billion globally (2019 estimates) High U.S. procedure concentration: <300 hospitals and ~1,400 surgeo
Slide 4: COVID-19 Update
COVID-19 Update Working closely with surgeon base, partners, and key suppliers; continuing to build inventories of critical products Accelerated sales training on new products including Orthex and recently acquire Apifix with remote learning Environment Company implemented safety measures across the
Slide 5: OP Today
OP Today A Company Built on a CAUSE Cause Company Snapshot Improving the lives of children Treated >178,000 patients since inception with orthopedic conditions 35 surgical systems; ~7,500 SKUs; strong pipeline 4 additional systems from Vilex and ApiFix acquisitions 109 direct employees; 164 focused
Slide 6: Our Key Idea
Our Key Idea Children Are Not Small Adults Superior Clinical Outcomes OP’s Market Impact Re-Purposed Adult Plate OP’s Solution Address orthopedic industry’s lack of focus on product development, clinical education, and sales presence Implants and instruments avoid complications of re-purposed adult
Slide 7: Large and Focused Market
Large and Focused Market OP’S $3.2 Billion Current Addressable Global Market1 $1.4 Billion U.S. Addressable Market1 High Concentration of Pediatric Trauma & Deformity and Scoliosis Procedures 3,157 U.S. Sports Hospitals Medicine Smart $170M Implants $363M 38% Scoliosis Procedures $308M (%) 62% Traum
Slide 8: Product Line & Growth Diversification
Product Line & Growth Diversification 2019 Revenue by Segment (% Total) $72.6 million sales in 2019, increasing 26% Scoliosis Well diversified product sales and sources of 30% growth Trauma & All major product families contributed to 2% Deformity revenue growth Sports 68% Medicine/ All products have
Slide 9: A Proven Strategy Since 2011
A Proven Strategy Since 2011 Sales Focus on Teaching Deploy Expand Expand Clinical Institutions and Instrument Addressable Education High Volume Sets Procedures Programs Hospitals Goals Accelerate sales growth Develop and acquire novel technologies 9
Slide 10: Trauma & Deformity: New Systems & Product Launches (2017-2018)
Trauma & Deformity New Systems & Product Launches (2017-2018) Titanium PediPlates® Clavicle Plate Wrist Fusion Plate PediFlex Pediatric Nailing System System System Advanced Platform | FEMUR (Expands physeal (First pediatric (First pediatric (Expands into tethering offering) specific system) specifi
Slide 11: New Systems & Upcoming Product Launches (2019-2020)
New Systems & Upcoming Product Launches (2019-2020) Acquired Launched Launched Launched Launched Launching Launching June’19 Sept’19 Nov’19 Dec’19 Mar’20 2020 2020 Trauma & Deformity Orthex Next Generation PediFoot QuickPack™ Large Fragment Osteogenesis PediFoot (External fixation Cannulated (First
Slide 12: Strong Pipeline
Strong Pipeline Expanding Our Addressable Market CMF Clavicle Demonstrated ability to Proximal Rib expand portfolio to full Humerus array of pediatric surgeries Spine Elbow Growing Rods Hand & Wrist OP Today OP Tomorrow Now Under Development Pelvis Hip & Long Bone Knee (Sports Medicine) Foot & Ankle
Slide 13: Leading Edge Systems in Development
Leading Edge Systems in Development Smart Implants Early Onset Scoliosis Proof of concept established in 2018 with Emerging surgical trends not being pursued by substantial development in 2019 major spine companies Intervention in patients as young as 10 2 embodiments: (1) scoliosis (2) intramedulla
Slide 14: Global Sales Coverage
Global Sales Coverage United States International 76% of 2019 24% of 2019 Revenue Revenue 38 Sales Agencies, 8 Sales Agencies most of which are + 39 Stocking exclusive* Distributors* Direct in UK, IRE, AUS, NZ, CAN, BE, NL, IT * Data as of June 2020 Currently selling to major children’s hospitals in
Slide 15: Vilex Acquisition
Vilex Acquisition 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 for
Slide 16: Orthex Advantages
Orthex Advantages 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. Defe
Slide 17: ApiFix Acquisition
ApiFix Acquisition Transaction Details Acquisition: In April 2020, OP purchased ApiFix1 and its MID-C ApiFix minimally invasive deformity correction system, for 934,768 shares Procedure of common stock and $2 million in cash paid at closing, plus milestone payments and an earnout over a period of fo
Slide 18: A Novel Surgical Option
A Novel Surgical Option ApiFix is a Viable Alternative to Failed Bracing and Spinal Fusion for the Treatment of Progressive Scoliosis Exercise Brace ApiFix System Fusion Surgery Curves < 25º Curves 25º- 40º Curves 35º - 60º Curves > 50º 18
Slide 19: MID-C System Advantages
MID-C System Advantages Minimally Invasive Deformity Correction (MID-C) System for Scoliosis • 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 unilatera
Slide 20: Competitive Landscape
Competitive Landscape New Competitors Would Face Formidable Obstacles Product breadth Surgeon relationships Sales and distribution network Clinical education programs Pediatric brand equity Reputation with pediatric orthopedic societies Dynamic culture “The ship has sailed.” 20
Slide 21: What Does Category Leadership Mean?
What Does Category Leadership Mean? Surgeon relationships and Broadest, most innovative clinical education product offering Relationships with surgeons who use 13 years’ clinical understanding entire portfolio New product pipeline Major provider of clinical education Pediatric Market Gateway for Lea
Slide 22: Financial Review
Financial Review
Slide 23: Consistent 20+% Revenue Growth Since Inception
Consistent 20+% Revenue Growth Since Inception $95 $90 $85 $80 $75 $72.6 $70 Revenue ($ in Millions) $65 $17.5 $60 $57.6 $55 $50 $45.6 $14.1 $45 $40 $37.3 $10.7 $35 $31.0 $8.5 $30 $23.7 $6.1 $55.1 $25 $19.6 $20 $5.3 $43.5 $16.1 $3.9 $34.9 $15 $10.2 $2.8 $28.8 $7.1 $24.9 $10 $0.9 $18.4 $3.0 $13.3 $15
Slide 24: Category Revenue Summary
Category Revenue Summary $80 $0.8 $1.7 $70 $1.0 $60 $1.2 $21.5 $10.1 Revenue ($ in Millions) $7.5 $50 $1.2 $16.7 $40 $1.1 $11.6 $1.1 $30 $9.4 $0.8 $7.4 $49.4 $21.9 $21.4 $20 $3.6 $39.7 $32.8 $26.8 $10 $19.3 $22.5 $0 2014 2015 2016 2017 2018 2019 6M 2019 6M 2020 Trauma & Deformity Scoliosis Sports Me
Slide 25: Revenue Seasonality
Revenue Seasonality Seasonality Drives Stronger Performance in Summer Months and Holiday Periods 35% 30% 29% Revenue as % of Total Year 27% 27% 26% 25% 26% 27% 26% 26% 25% 26% 25% 25% 22% 21% 21% 20% 20% 15% 10% 5% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2016 2016 2016 2016 2017 2017 2017
Slide 26: Income Statement Summary
Income Statement Summary ($ in Millions) FY 2016 FY 2017 FY 2018 FY 2019 6M 2019 6M 2020 Revenue $37.3 $45.6 $57.6 $72.6 $32.9 $29.9 Growth % 20% 22% 26% 26% 21% (9%) Gross Profit $26.4 $34.5 $42.7 $54.6 $24.3 $22.3 Margin % 71% 76% 74% 75% 74% 74% Operating Expenses $32.5 $40.9 $52.2 $63.7 $28.8 $3
Slide 27: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in Millions) Six Months Ended June 30, 2019 2020 Net loss ($5.5) ($14.4) Interest expense, net 0.9 1.8 Other expense 0.0 0.2 Depreciation and amortization 1.9 3.3 Stock-based compensation 1.2 3.5 Fair value adjustment of contingent consideration - 0.9 Acquisition re
Slide 28: Balance Sheet
Balance Sheet ($ in Millions) As of June 30, 2020 Assets Liabilities Cash & Restricted Cash $114.4 Accounts payable $6.0 Accounts receivable 14.9 Debt 21.1 Inventory (net) 48.9 Accrued expenses 4.5 Other current assets 2.2 All other liabilities 54.4 PP&E (net) 24.1 Paid-in capital 385.5 Intangibles
Slide 29: Summary
Summary Surgeon relationships and Broadest, most innovative clinical education product offering Robust organic growth Attractive growth and opportunities margin profile 29