Orthopediatrics Corp. · NASDAQ:KIDS
Orthopediatrics — Investor Presentation (August 2019)
27 slides from Orthopediatrics's investor presentation, Aug 12, 2019
Slide 1: OrthoPediatrics Corp.
OrthoPediatrics Corp. Mark Throdahl, CEO August 2019 Fred Hite, CFO F
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 estimated in 2019 High U.S. procedure concentration: <300 hospitals and ~1,400 surge
Slide 4: OP Today: A Company Built on a Cause
OP Today A Company Built on a CAUSE Cause Company Snapshot Improving the lives of children Treated >150,000 patients since inception with orthopedic conditions 29 surgical systems; 8,000+ SKUs; strong pipeline1 3 additional systems from Vilex acquisition 86 direct employees; 152 focused sales reps1
Slide 5: Our Key Idea: Children Are Not Small Adults
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 6: 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 7: Product Line Diversification
Product Line Diversification 2018 Revenue by Segment $57.6 million sales in 2018, increasing 26% Scoliosis Well diversified sources of growth 29% All major product families supported FY 2018 26% revenue growth Sports Trauma & Medicine/ Firefly, PNP|Femur, and PediFrag were key 2% Deformity Other 69%
Slide 8: 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 novel technologies 8
Slide 9: New Systems & Product Launches (2017-2018)
New Systems & Product Launches (2017-2018) Titanium Clavicle Wrist Fusion PediFlex Pediatric Nailing PediPlates® Plate System Plate System Advanced Platform | FEMUR System (First pediatric (First pediatric (Expands into adolescent (Expands physeal specific specific cases) Trauma&Deformity tethering
Slide 10: Upcoming New Systems & Product Launches (2019)
Upcoming New Systems & Product Launches (2019) Launching Launching Launching Launching Development Development 3Q19 3Q19 4Q19 4Q19/1Q20 in Process In Process Cannulated QuickPack™ PediFoot Slipped Capital Osteogenesis PNP | Tibia Trauma&Deformity Screw Bone Void (First pediatric Femoral Epiphysis Im
Slide 11: Strong Pipeline Expanding Our Addressable Market
Strong Pipeline Expanding Our Addressable Market CMF Clavicle Demonstrated ability to Proximal Rib expand portfolio to full Humerus Spine array of pediatric surgeries Elbow Growing Rods Hand & Wrist OP Today OP Tomorrow Now Under Development Pelvis Hip & Long Bone Knee (Sports Medicine) Foot & Ankle
Slide 12: Leading Edge Systems in Development
Leading Edge Systems in Development Smart Implants Spinal Tethering Proof of concept established in 2018 with Emerging procedure with off-label use of substantial development in 2019 adult product. Need for pediatric system. Intervention in patients as young as 10 2 embodiments: (1) scoliosis (2) in
Slide 13: Global Sales Coverage
Global Sales Coverage United States International 75% of 2018 25% of 2018 Revenue Revenue 34 Sales Agencies, 7 Sales Agencies most of which are + 38 Stocking exclusive* Distributors* Direct in UK, IRE, AUS, NZ, CAN, BE, NL * Data as of 2Q 2019 Currently selling to major children’s hospitals in the U
Slide 14: Vilex Acquisition
Vilex Acquisition Transaction In June OP purchased Vilex, including its Orthex Hexapod ex-fix system and proprietary CORA-based x-ray software Separate Vilex’s adult business and pursue potential divestiture Consideration $50 million in cash + $10 million in shares = $60 million Benefits Expands OP’
Slide 15: Separating Adult from Pediatric Products
Separating Adult from Pediatric Products OP Owns Orthex Hexapod ex-fix system and proprietary point-and-click x-ray planning software 50% annual revenue growth since FDA clearance in mid-2016 Generated $3.1 million of revenue in 2018 Potential Sales of Vilex’s Adult Systems $8.7 million of 2018 reve
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: 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.” 17
Slide 18: 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 12 years’ clinical understanding entire portfolio New product pipeline Major provider of clinical education Pediatric Market Gateway for Lea
Slide 19: Financial Review
Financial Review
Slide 20: Consistent 20+% Revenue Growth Since Inception
Consistent 20+% Revenue Growth Since Inception $75 $70.8 - $72.8* $70 $65 $60 $57.6 $55 $14.1 $50 $45.6 $45 $40 $37.3 $10.7 $35 $31.0 $8.5 $30 $6.1 Revenue Millions) in ($ $25 $23.7 $19.6 $5.3 $43.5 $20 $16.1 $3.9 $34.9 $15 $2.8 $28.8 $10.2 $24.9 $10 $7.1 $0.9 $18.4 $13.3 $15.8 $5 $3.0 $0.4 $9.3 $0.
Slide 21: Category Revenue Summary
Category Revenue Summary $70 $0.8 $60 $1.2 $0.6 $10.1 $50 $1.2 $16.7 $7.6 $1.1 $40 $11.6 $1.1 $30 $9.4 $0.8 $7.4 $21.9 $20 $3.6 $39.7 RevenueMillions) in ($ $19.0 $32.8 $26.8 $22.5 $10 $19.3 $0 2014 2015 2016 2017 2018 6M 2018 6M 2019 Trauma & Deformity Scoliosis Sports Medicine/Other 21
Slide 22: Revenue Seasonality
Revenue Seasonality Seasonality Drives Stronger Performance in Summer Months and Holiday Periods 30% 27% 27% 27% 26% 25% 26% 26% 26% 25% 25% 22% 21% 21% 20% 15% 10% Revenue % as Totalof Year 5% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 22
Slide 23: Income Statement Summary
Income Statement Summary ($ in Millions) FY 2016 FY 2017 FY 2018 6M 2018 6M 2019 Revenue $37.3 $45.6 $57.6 $27.2 $32.9 Growth % 20% 22% 26% 26% 21% Gross Profit $26.4 $34.5 $42.7 $20.2 $24.3 Margin% 71% 76% 74% 74% 74% Operating Expenses $32.5 $40.9 $52.2 $26.7 $28.8 Operating Loss ($6.1) ($6.5) ($9
Slide 24: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation ($ in Millions) Six Months Ended June 30, 2018 2019 Net Loss ($7.7) ($5.5) Interest expense, net 1.1 0.9 Other expense 0.1 0.0 Depreciation and amortization 1.4 1.9 Stock-based compensation 0.6 1.2 Accelerated vesting of restricted stock upon IPO 2.0 - Acquisition rela
Slide 25: Balance Sheet
Balance Sheet ($ in Millions) As of June 30, 2019 Assets Liabilities Cash $21.9 Accounts Payable $6.0 Accounts Receivable 14.9 Debt 51.2 Inventory 32.8 Accrued Expenses 4.0 Other Current Assets 37.2 All Other Liabilities 2.1 PP&E (net) 20.9 Paid In Capital 209.3 Intangibles 23.7 Accumulated Deficit
Slide 26: Vilex's Adult Product Line
Vilex’s Adult Product Line Advanced the process of finding a buyer for Vilex’s adult product line. Formed a special board committee to supervise management’s authorized disposition of these assets and have engaged advisors to assist in this process. Anticipate significant interest in the assets to b
Slide 27: Summary
Summary Surgeon relationships and Broadest, most innovative clinical education product offering Robust organic growth Attractive growth and opportunities margin profile 27
Orthopediatrics — Investor Presentation (August 2019) on 6ix