Orthofix Medical Inc. · NASDAQ:OFIX
Orthofix Medical — Q3 2024 Earnings Presentation
40 slides from Orthofix Medical's earnings presentation, Nov 7, 2024
Slide 1: Clear Course for Profitable Growth
Clear Course for Profitable Growth Investor Presentation November 7, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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 cur
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures Management uses certain non-GAAP financial measures in this presentation, most specifically Adjusted EBITDA, Adjusted Gross Margin, Adjusted Net Income and Free Cash Flow, as a supplement to GAAP financial measures to further evaluate the company’s operating performance p
Slide 4: Key Themes
Key Themes Disciplined, Profitable Growth to Maximize Value Creation Building on a strong foundation as a leading global med tech company with a 01 comprehensive portfolio of innovative spinal hardware, bone growth therapies, biologics, specialized orthopedic solutions, and an advanced surgical navi
Slide 5: Q3 2024 Financial Highlights
Q3 2024 Financial Highlights $196.6M $19.2M $5.9M 18% 9% 15% 71.3% Net Sales Non-GAAP Free Cash Flow2 U.S. Spine Bone Growth U.S. Orthopedics Non-GAAP 7% Growth YoY Adjusted EBITDA2 Significant Fixation3 YoY Net Therapies YoY YoY Net Sales Adjusted as reported $5.7M YoY improvement in Sales Growth N
Slide 6: Q3 2024 Key Messages
Q3 2024 Key Messages Strong Q3 driven by above-market growth where our performance once again was led by 01 strength in our U.S. markets Solid operational execution – On track to reach profitability objectives, including positive 02 free cash flow for 2H 2024, much earlier than originally anticipate
Slide 7: The New Orthofix
The New Orthofix Commitment to Disciplined, Profitable Growth to Deliver Life-Changing Solutions and Maximize Value Creation 7
Slide 8: Building on a Strong Foundation – Transformation Focused on Accelerating Excellence
Building on a Strong Foundation – Transformation Focused on Accelerating Excellence RECENT ACCOMPLISHMENTS CONTINUED LEADERSHIP FOCUS AREAS – AND TRANSFORMATIVE ACTIONS MULTIPLE LEVERS FOR PROFITABLE GROWTH • Building on clear competitive Innovation Focus advantages Continued development of differen
Slide 9: Reinvigorated and Aligned Around Our New Vision and Mission
Reinvigorated and Aligned Around Our New Vision and Mission Vision The unrivaled partner in med tech, delivering exceptional experiences and life-changing solutions Mission We provide medical technologies that heal musculoskeletal pathologies. We enable our teams through opportunities for growth, ow
Slide 10: Orthofix Today
Orthofix Today 1980 Founded ~$647M ~$63.1M Market-Cap1 TTM Adjusted EBITDA2 Employees 1,600+ Key Stats ~71.3% ~$32.5M NASDAQ OFIX TTM Adjusted Gross Margin2 Cash, Cash Equivalents, and Restricted Cash2 TTM Net Sales2 Global Presence by Business TTM Net Sales2 by Geography 15% Bone Growth 29% Therapi
Slide 11: Capitalizing on Clear Competitive Advantages
Capitalizing on Clear Competitive Advantages Comprehensive Established World-Class, Portfolio of Distribution Channels Visionary Leadership Transformative and Extensive Global Team with Deep Solutions Commercial Reach Sector Expertise Improved Large Addressable Clinical Efficiencies and Markets with
Slide 12: Addressable Markets ~$15B within Full Continuum of Care
Addressable Markets ~$15B within Full Continuum of Care 2025 – 2027 Total Expected Well-Positioned for Favorable Macro Trends Addressable Market Market Growth Rate Spinal Implants ~$10.1B ~3% – 4% Aging Digital Bone Growth Population Healthcare ~$0.6B ~2% – 3% Therapies Biologics ~$2.1B ~2% – 3% Evo
Slide 13: Spinal Implants
Spinal Implants Executing Innovation and Taking Share • Comprehensive, best-in-class spinal implants designed to work in concert Market Overview with 7D Navigation and biologics to support improved clinical outcomes Thoracolumbar • Focus on deformity correction and experts in cervical fixation and F
Slide 14: Bone Growth Therapies
Bone Growth Therapies Maximizing #1 Market Position • Safe, effective, non-surgical alternative to aid in bone healing of fracture Market Overview management and high-risk spine fusions • Most comprehensive portfolio of bone growth stimulation devices • Most indications on the market to aid in bone
Slide 15: Biologics
Biologics Growing from a Position of Strength • Full spectrum of biologic solutions to enhance fusion process and Market Overview Demineralized Bone promote bone repair and growth • Provide industry leading, best-in-class products in each of the major Matrix bone grafting categories • #2 Position •
Slide 16: Orthopedics
Orthopedics Redefining Limb Reconstruction • Unique portfolio of limb reconstruction solutions, addressing the most Market Overview Extremity Deformity challenging orthopedic conditions in patients of all ages Correction & Limb Restoration Select Product Examples • Significant share capture opportun
Slide 17: Enabling Technologies
Enabling Technologies Empowering Excellence with Real-Time, Integrated Smart Technologies • FLASHTM Navigation with 7D Technology, world’s leading, zero-radiation1 Market Overview spine image-guided surgery system • Allows surgeons to perform fast, cost-effective, and radiation-free surgery • Pacese
Slide 18: Significant Cross-Portfolio Commercial Opportunities
Significant Cross-Portfolio Commercial Opportunities Bone Growth Therapies (BGT) • Combined portfolio with Biologics to target Trauma surgeons Spine • Combine with select Orthopedics product lines Orthopedics • Maximize procedural • Expanding domestically through legacy • Maximize procedural selling
Slide 19: Looking Forward
Looking Forward Uniquely Positioned to Accelerate Our Profitable Growth Engine 19
Slide 20: Looking Forward – Accelerating Our Profitable Growth Engine
Looking Forward – Accelerating Our Profitable Growth Engine Invest in Capitalize on Differentiated Multiple Access Improve Technologies Points to Grow Operate Financial Strength in Areas Where Business at with Discipline for and Drive We Can Win Sustained, Margin Expansion Strong, Positive and Lead
Slide 21: Invest in Differentiated Technologies
Invest in Differentiated Technologies Systematic Approach to Driving Innovation Focal KPIs 1 Regular cadence of Rigorous allocation of resources to high-return opportunities meaningful, high-impact new product launches Leverage technologies (7D, Biologics, BGT) and sales channels (Spine, Orthopedics
Slide 22: Innovation Spotlight – FLASH Navigation with 7D Technology
Innovation Spotlight – FLASHTM Navigation with 7D Technology Revolutionizing Spinal Navigation Created Meaningful Advantages with FLASHTM Navigation with 7D Technology reduction in intraoperative 97.8% radiation during adult degenerative spinal fusions1* First and only image guided surgery system re
Slide 23: Capitalize on Multiple Access Points to Grow Business
Capitalize on Multiple Access Points to Grow Business at Sustained, Above-Market Rates Current Access Points Spine Spine Fracture 7D Orthopedics BGT Hardware BGT ✓ ✓ Selling into New Spine Accounts ✓ Adding to Future Opportunities OFIX Accounts Adding 7D ✓ ✓ Adding Biologics ✓ ✓ ✓ Adding BGT ✓ ✓ ✓ A
Slide 24: Patient Case Study – Cross-Portfolio Continuum of Care
Patient Case Study – Cross-Portfolio Continuum of Care Background OFIX Unique Solution Result / Outcomes • When Olympic Gold Medalist • Laura had successful anterior • Successful Orthofix cross- Laura Wilkinson was training for cervical discectomy and portfolio procedure her fourth Olympic Games, he
Slide 25: Advancing Toward Our New 2027 Financial Goals
Advancing Toward Our New 2027 Financial Goals On a Faster Path to Profitability with a Stronger Financial Profile 25
Slide 26: Operate with Discipline for Margin Expansion
Operate with Discipline for Margin Expansion Our Approach to SPOTLIGHT – SeaSpine Merger Operational Excellence Integrating and Capturing Synergies • Building culture of excellence and accountability Portfolio Benefit + Commercial Benefit through implementation of the High Performance • Significant
Slide 27: Improving Financial Strength and Driving Strong, Positive Free Cash Flow
Improving Financial Strength and Driving Strong, Positive Free Cash Flow Driving Positive Free Cash Flow Free Cash Flow ($M) • Expect to be free cash flow positive for the 2nd half of 2024 and for full-year 2025 $5.9 − Drop-through to EBITDA of incremental revenue − Working Capital improvements $(30
Slide 28: Improving Financial Strength and Balance Sheet Flexibility
Improving Financial Strength and Balance Sheet Flexibility New Term Loan Established, Outcomes Which Allows for Extra ✓ Entered into New Agreement on 11/7/2024 Capacity and Increased • ~$275M term loan Flexibility • ~$160M funded up front • ~$115M available after 1/1/251 Ran competitive process to r
Slide 29: Reiterating Full-Year 2024 Guidance
Reiterating Full-Year 2024 Guidance1 $795M – $64M – $800M $69M Net Sales Adjusted EBITDA Positive Free Cash Flow for 2H24 1 As of the Company’s Q3 2024 Earnings Call hosted on 11/7/24. Inclusion of this information in this presentation is not a confirmation or an update of, and should not be constru
Slide 30: Introducing Our 2027 Financial Goals
Strategy is Driving Long-Term Profitable Growth – Introducing Our 2027 Financial Goals New 2027 6% – 7% Mid-Teens Positive Financial Net Sales CAGR Adj. EBITDA FCF Generation Targets (2025 – 2027) (Full-year 2027) (2025 – 2027) Growth Differentiated Multiple Margin Strong Access Engine Pillars Techn
Slide 31: World-Class Leadership Team with Extensive Med Tech Expertise
World-Class Leadership Team with Extensive Med Tech Expertise – Focused on Results Massimo Calafiore Julie Andrews Patrick Fisher Max Reinhardt President and Chief Financial Officer President, President, Chief Executive Officer Global Orthopedics Global Spine Year Joined: 2024 Year Joined: 2024 Year
Slide 32: Investment Summary – Why Invest in Orthofix?
Investment Summary – Why Invest in Orthofix? Strong fundamentals with profitable growth opportunity and compelling value 01 proposition across diverse portfolio More focused commercial strategy with robust innovation pipeline complemented 02 by successful cross-selling New leadership team well-posit
Slide 33: Appendix
Appendix Financial and Non-GAAP Reconciliation Tables
Slide 34: Net Sales by Major Product Category by Reporting Segment
Net Sales by Major Product Category by Reporting Segment Three Months Ended September 30, Constant Currency (Unaudited, U.S. Dollars, in millions) 2024 2023 Change Change Bone Growth Therapies $ 57.9 $ 53.4 8.6% 8.6% Spinal Implants, Biologics and Enabling Technologies 108.2 101.0 7.1% 7.1% Global S
Slide 35: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets September 30, December 31, (U.S. Dollars, in thousands, except par value data) 2024 2023 (Unaudited) Assets Current assets Cash and cash equivalents $ 30,054 $ 33,107 Restricted Cash 2,500 4,650 Accounts receivable, net of allowances of $7,878 and $7,130, respec
Slide 36: Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Operations Three Months Ended Nine Months Ended September 30, September 30, (Unaudited, U.S. Dollars, in thousands, except share and per share data) 2024 2023 2024 2023 Net sales $ 196,606 $ 184,006 $ 583,834 $ 546,226 Cost of sales 61,553 64,243 186,790 196,583
Slide 37: Adjusted Gross Profit and Adjusted Gross Margin; Adjusted EBITDA
Adjusted Gross Profit and Adjusted Gross Margin Three Months Ended September 30, Nine Months Ended September 30, (Unaudited, U.S. Dollars, in thousands) 2024 2023 2024 2023 Gross profit $ 135,053 $ 119,763 $ 397,044 $ 349,643 Share-based compensation expense 557 463 1,591 1,416 SeaSpine merger-relat
Slide 38: Adjusted Net Income
Adjusted Net Income Three Months Ended Nine Months Ended September 30, September 30, (Unaudited, U.S. Dollars, in thousands) 2024 2023 2024 2023 Net loss $ (27,388) $ (28,857) $ (96,851) $ (129,221) Share-based compensation expense 6,531 6,274 25,290 32,540 Foreign exchange impact (1,176) 1,909 1,26
Slide 39: Cash Flow and Free Cash Flow
Cash Flow and Free Cash Flow Nine Months Ended September 30, (Unaudited, U.S. Dollars, in thousands) 2024 2023 Net cash from operating activities $ 2,060 $ (39,059) Net cash from investing activities (26,445) (18,078) Net cash from financing activities 19,222 40,042 Effect of exchange rate changes o
Slide 40: www.Orthofix.com NASDAQ: OFIX
For additional information, please contact: www.Orthofix.com Julie Dewey, IRC NASDAQ: OFIX Chief IR & Communications Officer juliedewey@orthofix.com 209-613-6945 40