Orthopediatrics Corp. · NASDAQ:KIDS
Orthopediatrics — Investor Day (September 2024)
85 slides from Orthopediatrics's investor day presentation, Sep 12, 2024
Slide 1: Investor Day
Investor Day September 12, 2024 www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 2: Disclaimer
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 business, op
Slide 3: David Bailey, President & CEO
David Bailey President & CEO www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 4: Today's Agenda
Today’s Agenda Introduction David Bailey President and CEO Trauma & Deformity Joe Hauser President T&D and OPSB Scoliosis Greg Odle President Scoliosis Specialty Bracing (“OPSB”) Joe Hauser President T&D and OPSB Surgeon KOL Panel Dr. Tuason, Dr. Hyman Enabling Technology Kevin Unger, President, Ena
Slide 5: Founded on the cause of impacting children's lives
OrthoPediatrics was founded on the cause of impacting the lives of children with orthopedic conditions 1,076,000+ pediatric patients treated since inception 2024 // Analyst Day 5
Slide 6: Historical Challenges of Pediatric Orthopedics
Historical Challenges of Pediatric Orthopedics Re-Purposed Adult Plate Screws through growth plate 01 Children’s unique clinical conditions 02 Existing solutions are re-purposed from adult implants 03 Limited development of new technologies 04 No specialized sales force in Pediatric Orthopedics 05 L
Slide 7: Continued Execution of Strategic Pillars
Continued Execution of Strategic Pillars Laser focus on high-volume Children’s Hospitals that treat 01 majority of pediatric patients 02 Provide a broad product portfolio uniquely designed to treat children, surround pediatric orthopedic surgeons covering their needs Consistent 03 Deploy instrument
Slide 8: Accomplishments Since IPO
Accomplishments Since IPO 22% revenue CAGR since 2016 driven by market share gains Consistent cadence of innovative pediatric focused product launches – +70 total unique pediatric systems and enabling technology Expanded the only global pediatric orthopedic commercial channel – 200 domestic fi
Slide 9: Strong History of Y/Y Revenue Growth ($M)
Strong History of Y/Y Revenue Growth ($M) 35% $201.5 22% $148.7 25% $122.3 38% $98.0 26% -2% 26% $72.6 $71.1 22% $57.6 20% 31% $45.6 21% $37.3 22% $31.0 58% $23.7 44% $19.6 400% 137% $16.1 $7.1 $10.2 $0.6 $3.0 1 2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 U
Slide 10: Significant Adj EBITDA ($M) Progression
Significant Adj EBITDA ($M) Progression $8-9 $5.0 $0.2 1 2020 2021 2022 2023 2024 ($1.5) ($4.4) 2024 // Analyst Day 10 1.Represents the Company’s 2024 adj. EBITDA guidance range of $8 to $9 million
Slide 11: Focus on High-Vol Children's Hospitals: US Target Market $1.6B
Focus on High-Vol Children’s Hospitals Current US Target Market – $1.6B Historical U.S. Target Market1 — $1.2B Current U.S. Target Market1 — $1.6B $300M Enabling Tech $455M Trauma, Deformity Correction $455M & Sports Medicine Implants Trauma, Deformity $500M 300 U.S. Pediatric Centers Correction & S
Slide 12: Transformational Near-Term Catalysts
Transformational Near-Term Catalysts T&D Scoliosis • EOS • Rib & Pelvic System • P3 • VerteGlide • IM Nail • eLLi • International growth • Next-Gen fusion • International growth OPSB Enabling Technology • Regional clinic expansion • Playbook • R&D acceleration • IotaMotion • OPSB sales channel 2024
Slide 13: Joe Hauser, President T&D, OPSB
Joe Hauser President T&D, OPSB www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 14: Core Trauma and Deformity Drivers
Core Trauma and Deformity Drivers Leverage our Scale Product Development Account Penetration Well established and poised to Key New Product Development Deeper penetration within take more share and double drivers that will lead to current and new International revenue over the next years consistent
Slide 15: Large Runway for Growth: 2016
Large Runway for Growth How did we get here 2016: • $27M, 3% Global Market Share • Present at 100 Children’s Hospitals • 13 Surgical Systems • 40% product coverage T&D sustainable growth driver over long period of time 2024 // Analyst Day 15
Slide 16: Large Runway for Growth: Today
Large Runway for Growth Ability to leverage growth as an established and incumbent presence How did we get here Today: • 16% Global Market Share • Present at ALL 300 US Children’s Hospitals and many INTL sites • 41 Surgical Systems • 80% product coverage 2016: • $27M, 3% Global Market Share • Presen
Slide 17: Large Runway for Growth: Future
Large Runway for Growth Significant amount of runway and TAM remaining Future: Ability to leverage growth as • Estimating $125M of opportunity, 31% an established and incumbent • Global Market Share Present at ALL US and INTL Children’s presence • sites or centers 55 Surgical Systems • 100% product
Slide 18: Surrounding the Hospital
Surrounding the Hospital Digital Pre-Planning More inventory Navigation for and storage Scoli and T&D solutions P3 and PNP Surgical Systems Playbook Surgeon Contracts and Education and Pricing Training OPSB 2024 // Analyst Day 18
Slide 19: New Product Development
New Product Development MDO Move Brace DF2 PediFrag Brace PNP MD Ortho Orthex PonsetiTM PediPlate Clavicle Pediatric Drive Rail Cannulated PediNail Wrist External PediFoot Specialty Physeal Hip Systems ACL Plating Nailing External MP+ Screws System Fusion Fixation System Clubfoot Tethering LCB / LPF
Slide 20: Intramedullary Nail Franchise
Intramedullary Nail Franchise 2016 PediNail System <$5M of annual revenue 2017 PNP Complete overhaul to new Pediatric Nailing Platform IM nail platform Present PNP Femur >$10M of annual revenue PNP Expected to have material Tibia impact in 2025 & beyond Future PNP PNP PNP Grow Retrograde FD Pipeline
Slide 21: Transformational NPD Growth Drivers
Transformational NPD Growth Drivers ~50% of all T&D revenue Only company that will have 3rd generation system focused on pediatric/adolescents 6 new systems over the next 5 years Created new techniques and procedures 2024 // Analyst Day 21
Slide 22: First Pediatric Plate and Screw Platform
The FIRST EVER Pediatric / Adolescent focused Plate and Screw Platform OrthoPediatrics Fill in gaps in product offering will expand 01 (increase our product coverage and TAM) leadership 02 Innovative Quality and Performance improvements position in the Pediatric 03 Digital and Sterile solutions (to
Slide 23: New Growth from Current Gaps in Product Offering
New Growth from Current Gaps in Product Offering P3 | Hip P3 | Mini P3 | Tibia P3 | Femur 2.0 / 2.4 / 2.7 / 3.5 Screw System 2024 // Analyst Day 23
Slide 24: Innovative Quality and Performance Improvements
Innovative Quality and Performance Improvements P3 | Hip P3 | Mini P3 | Tibia P3 | Femur Platform: Consistent Look and Feel 2024 // Analyst Day 24
Slide 25: Digital and Sterile Solutions
Digital and Sterile Solutions P3 | Hip P3 | Mini P3 | Tibia P3 | Femur Platform: Consistent Look and Feel Pre- Intra op -op Post-op 2024 // Analyst Day 25
Slide 26: P3 Expected Launch Dates
P3 Expected Launch Dates 2022 2023 2024 2025 2026 2027 2028 P3 | Hip Launch P3 | Mini/Small Launch P3 | Tibia Launch P3 | Femur/Large Frag Launch P3 | Anatomical Specialty Sets Launch 2024 // Analyst Day 26
Slide 27: International
International Deeper Account Penetration (EU MDR) New Markets Enhanced focus on agency and direct organizational 2016 2017 2018 2019 2020 2021 2022 2023 2024 growth U.S. International 2024 // Analyst Day 27
Slide 28: Core Trauma and Deformity Drivers
Core Trauma and Deformity Drivers Leverage our Scale Product Development Account Penetration Well established and poised to Key New Product Development Deeper penetration within take more share and double drivers that will lead to current and new International revenue over the next years consistent
Slide 29: Greg Odle, President Scoliosis
Greg Odle President Scoliosis www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 30: Redefining Leadership in Pediatric Spine Deformity
Redefining Leadership in Pediatric Spine Deformity by surrounding the pediatric spine specialist surgeon with advanced technology Aggressive Deliver Next Leverage ApiFix Focused investment investment in Early Generation fusion outcomes to in attractive Onset Scoliosis system leveraging optimize pati
Slide 31: Early Onset Scoliosis (EOS)
Early Onset Scoliosis (“EOS”) Affects kids <10 years old Severe deformities “squeeze” the lungs and other organs – difficulty with breathing and digestion Treated at top-tier Children’s Hospitals, where the majority of fusion procedures are done Surgeons view this area as underserved and are despera
Slide 32: Building an EOS Platform
Building an EOS Platform Rib & Pelvic • Launched in January 2024 System • Focus on chest wall expansion to improve breathing capacity • Sets the stage for future growth-friendly implants • Currently under FDA review • Guided Growth VerteGlideTM • Allows for screws to “glide” along Verteglide smooth
Slide 33: VerteGlide
Building an EOS Platform VerteGlideTM Verteglide • Guided Growth concept • Allows for screws to “glide” along smooth rods • Harnessing the child’s growth to gradually correct the spine • Minimizes wear debris concerns 2024 // Analyst Day 33
Slide 34: Market History and Opportunity
Market History and Opportunity Currently a significant void in the Powered Growing Rod technology was introduced in market 2009 in Europe and approved by FDA in 2014 • Allowed for non-invasive adjustment through an external controller • Quickly became the standard of care for EOS, nearing $50M in gl
Slide 35: Introducing eLLi
Introducing eLLiTM Introducing eLLiTM Advancing the treatment of EOS 2024 // Analyst Day 35
Slide 36: eLLi Design Benefits
eLLi Design Benefits Adjustable force up to 500N (2-3x other systems) RF Power Transmission (not magnetic) from external control module to implant SMART implant provides feedback to user Eliminates “Cross-Talk” between rods Designed for Safety – reduced wear debris, biocompatible materials, improved
Slide 37: Breakthrough Device Designation (May 2024)
Breakthrough Device Designation (May 2024) 2024 // Analyst Day 37
Slide 38: Fusion Market Dynamics
Next Generation Fusion System Fusion Market Dynamics Most widely used surgical Involved in treatment of treatment to correct AIS, EOS, and scoliosis (90+%) Neuromuscular conditions Large players – Accounts for ~85% of MDT, DPS, GMED, ATEC OP Scoliosis revenue – limited investment $200M TAM in Childr
Slide 39: Next Generation Fusion System
Next Generation Fusion System Ultimate surgical experience for pediatric spinal fusion Designed exclusively for pediatric scoliosis patients and their surgeons Innovative, new device designs with an advanced digital platform Engineered to optimize the procedure 2024 // Analyst Day 39
Slide 40: Differentiated Development Goals
Development Goals System designed from the ground up specifically for pediatric Differentiated spinal deformity • Dramatic reduction in tulip head profile • Transforming the customer experience • Personalized case and tray configurations • Faster, more efficient workflows with advanced instrumentati
Slide 41: Non-fusion Direction
Non-fusion Direction ApiFix clinical outcomes continue to inform on ideal candidates based on age, severity, and type of curve Recently launched a new high-strength version to address lumbar curves where greater motion and higher stresses are encountered Expect modest growth rates for ApiFix over th
Slide 42: Current International Channel
Current OrthoPediatrics International Channel >50% of international scoliosis revenue comes from stocking distribution Stocking Distributors 2024 // Analyst Day 42
Slide 43: Future International Channel
Future OrthoPediatrics International Channel By the end of 2027 expect 70% of international scoliosis revenue to come from agencies Stocking Distributors Agency 2024 // Analyst Day 43
Slide 44: Focus on International Strategy
Focus on International Strategy Build off momentum in key markets with attractive pricing, viable regulatory pathways, and lower volatility: New investments in Anticipated MDR Opportunity to re-deploy EOS Strategy has people and infrastructure certification in Europe domestic Response sets as drawn
Slide 45: Summary Slide
Summary Slide EOS Enabling Response 7D Technology Fusion FireFly Non Boston Bracing ApiFix Fusion 2024 // Analyst Day 45
Slide 46: Summary Slide
Summary Slide VerteGlide eLLi Rib & Pelvic EOS Playbook Enabling Response 7D Technology Fusion NextGen FireFly Non Boston Bracing ApiFix Fusion 2024 // Analyst Day 46
Slide 47: Revenue Growth and Market Share Gain
Revenue Growth and Market Share Gain Hospital A New Growth Opportunities at High-Volume Children's Hospitals • Top ranked children's hospital in the U.S. Leverage our Scale • 20+ hospitals with similar profile to • Scoliosis market share <5% hospital A Well • established and poised Trauma & Deformit
Slide 48: Joe Hauser, President T&D, OPSB
Joe Hauser President T&D, OPSB www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 49: Pediatrics Specialty Bracing
Pediatrics Specialty Bracing Why OPSB: Entering a huge specialty Aggressive market based clinic expansion strategy bracing market where focus predominantly remains on adults • Helping more KIDS: ~80% of what surgeon does is Accelerate R&D with non-operative care increasing number of YoY • No focused
Slide 50: Why... From our Customers
Why… From our Customers… Michale Vitale MD, Brian Smith MD, John Flynn MD, Orthopedic Spine Surgeon Pediatric Orthopedic Surgeon Pediatric Orthopedic Surgeon “The opportunity for a well "We are thrilled that OP will “This partnership should greatly established well networked improve the experience o
Slide 51: 2024 Analyst Day
2024 // Analyst Day 51
Slide 52: OP Bracing, Boston O&P
oP BRACING Mobility Solutions for KIDS boston ORTHOTICS & PROSTHETICS P| a Mitchell Ponseti. . —— 2024 // Analyst Day oO Dshoediatce! 52. ——
Slide 53: The Patient Experience
The Patient Experience Diagnosis & Referral Evaluation & Treatment Fitting and Outcome Plan Development Tracking Comprehensive Education and Discussion Cast, Measure, Evaluation about Goals & Treatment and/or Scan Plan 2024 // Analyst Day 53
Slide 54: Key Growth-Strategic Objectives
Key Growth-Strategic Objectives Aggressive market-based Accelerate R&D with Scale OPSB selling channel clinic expansion strategy increasing number of YoY and sales force – grow with launches current portfolio of products 18 new markets by 2027 Launch 4 products in 2024 Doubling size of the sales (27
Slide 55: Current OPSB Clinic Markets
Current OPSB Clinic Markets Deeper penetration in 9 existing markets 2024 // Analyst Day 55
Slide 56: Children's Hospitals with Target Market Locations
300 Children’s Hospitals with 80 Target Market Locations 2024 // Analyst Day 56
Slide 57: Market Expansion
Market Expansion Pace of Market Expansion +4 markets in 2025 OPSB clinics +6 markets expected in 27/80 in 2026 markets by 2027 +8 markets in 2027 2024 // Analyst Day 57
Slide 58: ROI and Timing for Clinic Expansion
ROI and Timing for Clinic Expansion Greenfield Acqui-Hire 1-4 Initial Investment $200k-$500k $500K-$1M Positive EBITDA by end of Positive EBITDA by end of Clinics EBITDA Goal first full year first full year per FCF Goal After first full year Within first year ROI Goal Break even ROI by Year 3 Break
Slide 59: Accelerated R&D with increasing cadence of launches
Accelerated R&D with increasing cadence of YoY launches 4 products expected to launch in 2024 MMP Unilateral HiPpy (DDH & HD) Bracing compliance Sensor DF2 – hinge & new sizing Expect to launch 5 products in 2025 2024 // Analyst Day 59
Slide 60: Scale and Grow OPSB Sales Channel
Scale and Grow OPSB Sales Channel Leverage surgeon relationships Educate and sell portfolio Increase referrals to existing OPSB/BoP clinics 2024 // Analyst Day 60
Slide 61: DF2 – Success Stories
Would You Want These Products on Your Own Child? DF2 – Success Stories 2024 // Analyst Day 61
Slide 62: DF2 – Success Stories
Would You Want These Products on Your Own Child? DF2 – Success Stories 2024 // Analyst Day 62
Slide 63: Scale and Grow OPSB
Scale and Grow OPSB U.S. Specialty Bracing Market 1 — $0.5B • Help MORE KIDS! $175M $200M • Major growth driver for OP with Scoliosis Speciality Lower Limb Extremity Large $500M TAM Bracing Specialty Bracing • Estimated additional $1B oppt. • International Opportunity is exciting – learning more $12
Slide 64: OPSB Children's Hospitals
OPSB Children’s Hospitals Children’s Hospitals 2024 // Analyst Day 64
Slide 65: KOL Panel
Joshua E Hyman, MD Orthopedic Surgery, Pediatric Orthopedics Professor of Orthopedic Surgery at Columbia University Medical Center Dominick Tuason, MD Orthopedic Surgery, Pediatric Orthopedics Assistant Professor of Orthopedics and Rehabilitation at Yale New Haven Children's KOL Panel Hospital www.O
Slide 66: Kevin Unger, President Enabling Technologies
Kevin Unger President Enabling Technologies www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 67: Market Opportunity and Purpose
Market Opportunity and Purpose $39B Same Cause $133B US US Same Customer Adult Ortho Peds Ortho Adult ET/DH Peds ET/DH Significant opportunity exists for digital solutions to be applied in Pediatrics and Competitors are not well positioned to access this rapidly growing market 2024 // Analyst Day 67
Slide 68: Long-term Strategic Pillars
Market Opportunity and Purpose Long-term Strategic Pillars Improve Surgical Care, Efficiencies & Outcomes for surgeons & their teams by harnessing technology to solve problems. Create Competitive Advantage in core OP businesses by offering differentiated, pediatric-focused platforms to help accelera
Slide 69: Building A Sustainable Growth Engine: 3D Cutting Guides
Building A Sustainable Growth Engine 3D Cutting Guides 3D printed cutting guides and Jigs for challenging surgical procedures 2024 // Analyst Day 69
Slide 70: Building A Sustainable Growth Engine: Surgical Navigation
Building A Sustainable Growth Engine 3D Cutting Guides 3D printed cutting guides and Jigs for challenging surgical procedures Surgical Navigation Image Guided surgical navigation to increase precision and accuracy 2024 // Analyst Day 70
Slide 71: Building A Sustainable Growth Engine: Surgical Software
Building A Sustainable Growth Engine Surgical Software 3D Cutting Guides Surgical workflow and outcome 3D printed cutting guides and optimization platform Jigs for challenging surgical procedures Surgical Navigation Image Guided surgical navigation to increase precision and accuracy 2024 // Analyst
Slide 72: Building A Sustainable Growth Engine: Robotic Platform
Building A Sustainable Growth Engine Surgical Software 3D Cutting Guides Surgical workflow and outcome 3D printed cutting guides and optimization platform Jigs for challenging surgical procedures Robotic Platform Robotic platform for pediatric cochlear Surgical Navigation implant indication expected
Slide 73: Plan. Collaborate. Orchestrate. Analyze.
Plan. Collaborate. Orchestrate. Analyze. 2024 // Analyst Day 73
Slide 74: PLAYBOOK: Surgical Workflow Optimization
PLAYBOOK: Surgical Workflow Optimization Solution The Problem PreOp Translates unique pre-op planning Planning needs into a reproducible surgical process o Limited data to determine Contextual collaboration with care best practices and surgical team during planning & surgical procedures outcome opti
Slide 75: Iota Motion: Robot for Cochlear Implant Surgery
Iota Motion: Robot for Cochlear Implant Surgery Clinical Problem Market Opportunity 1 Reduces insertion force o Relies on extensive training with more demand for cochlear variation by up to 78%* $100M implants than skilled, experienced US Peds Market ENT surgeons, limits patient 2 access Reduces max
Slide 76: How we will sell
How we will sell Kevin Unger President Graham Heaven Suzy Thompson James Lucas Chris Schuckman Leader of Sales Navigation & SW sales Navigation & SW sales Navigation & SW sales OP Selling Organization (200 Strong) Experienced leadership Leveraged specialist Immediate access to top Peds First ever de
Slide 77: Outlook & Expectations
Building a Sustainable Growth Engine Outlook & Expectations o Market Launch of both Playbook and Iota New growth Motion platforms in the next 6 months driver Accretive o Establish the first Pediatric focused Enabling growth profile Technologies and Digital Health salesforce o Leverage existing OP Sa
Slide 78: Fred Hite, CFO & COO
Fred Hite CFO & COO www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 79: Financial Summary
Financial Summary 01 Continued aggressive revenue growth 02 Adjusted EBITDA > set deployments in 2025 03 Achieving Free Cash Flow positivity in 2026 04 Focus on ROI, balancing growth & cash usage 05 Capitalized to deliver long range forecast 2024 // Analyst Day 79
Slide 80: 3-year Financial Outlook
3-year Financial Outlook 2024 2027 Revenue: High teens annual grow OPSB Revenue: 20%+ annual growth Gross Margin: ~74-75% High Teens Expense changes as a % of revenue: Revenue S&M: decrease ~1% per year Growth with G&A R&D: consistent Leverage Cash G&A: increase at 50% of revenue R&D: High teens gro
Slide 81: Cash Flow Assumptions
Cash Flow Assumptions through ($M) 2024 2027 Business positioned to continue Adjusted EBITDA $8 - $9 ~300bps margin growth growing top line Sets Deployed (<$20) (~$15 - $20) while improving profitability toward Working Capital / Other (~$20) (~$15 - $20) free cash flow Op Cash - CapEx (~$30+) + posi
Slide 82: Balance Sheet
Balance Sheet Strong balance sheet with ~$90M proforma cash, cash equivalents & short-term attractive cost of capital investments* post Private Financing 8/5/24: $25M in additional Debt Expected Uses of Cash available for the future • Continued set deployment • Working capital supporting growth Achi
Slide 83: Closing Comments
Closing Comments www.OrthoPediatrics.com > 1,000,000 Kids Helped
Slide 84: 5-10 Year Aspirational Goals
5-10 year Aspirational Goals Surround the hospital with technology that improves clinical care and efficiency 2024 // Analyst Day 84
Slide 85: Q&A
Q&A www.OrthoPediatrics.com > 1,000,000 Kids Helped