OrthoPediatrics Corp. Reports Fourth Quarter and Full Year 2020 Financial Results
OrthoPediatrics reported full year 2020 revenue of $71.1 million, a 2% decline from 2019, impacted by COVID-19's effect on elective surgeries. Q4 revenue was $18.9 million, down slightly from 2019, with a 26.1% increase in domestic sales, but a 77.7% decline in international sales. The company expects 31-38% revenue growth in 2021, projecting sales of $93-$98 million. Notably, operating expenses rose 59.4% in Q4 due to legal settlements, leading to a net loss of $14.0 million for the quarter and $32.9 million for the year.
- Domestic revenue grew 26.1% in Q4 2020.
- International sales agency revenue growth accelerated to 51% in Q4.
- Revenue guidance for 2021 is $93-$98 million, representing 31%-38% growth.
- Full year 2020 revenue decreased 2% due to COVID-19.
- International revenue dropped 53.6% for the year.
- Operating expenses rose 28.4% for the full year.
Full year 2020 revenue of
Guidance for full year 2021 sales growth in the range of 31
WARSAW, Ind., March 10, 2021 (GLOBE NEWSWIRE) -- OrthoPediatrics Corp. (“OrthoPediatrics” or the “Company”) (Nasdaq: KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, announced today its financial results for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter / Full Year 2020 and Business Highlights
- Generated total revenue of
$18.9 million for the fourth quarter, down0.1% from$19.0 million in fourth quarter 2019. - Full year 2020 revenue decreased
2.0% to$71.1 million from full year 2019 revenue due to the impact of COVID-19 on elective surgery volumes. - Recorded a
$2.7 million revenue reduction due to the repurchase of inventory from a stocking distributor in Germany, Austria, and Switzerland that we converted to a sales agency in December 2020. - The
$2.7 million reduction impacted fourth quarter revenue growth by (14% ) and total year revenue growth by (4% ). - Domestic revenue growth in the fourth quarter of
26.1% compared to prior year with particular strength in Scoliosis and Sports Medicine/Other. - Continued acceleration of international sales agency revenue growth of
51% in the fourth quarter, up from26% in the third quarter of 2020. - Delivered strong synergies from acquisitions with 38 Orthex surgeon conversions, ApiFix receiving full approvals at 11 of the 20 IRB hospitals, and successful completion of 20 ApiFix surgeries through end of December 2020.
- Strengthened liquidity position with
$70.2 million in net proceeds from follow-on public offering in June 2020.
Mark Throdahl, Chief Executive Officer of OrthoPediatrics, commented, “Despite COVID-19, in 2020 we continued the systematic execution of our growth initiatives both domestically and internationally. Elective surgery volumes declined globally but staged a gradual recovery throughout the year. Second quarter sales declined
Mr. Throdahl continued, “We would like to recognize the commitment and discipline of our associates around the world who rose to the challenge of 2020. We would also like to thank our shareholders for their continued support during an unprecedented year. Last week we reached the milestone of an estimated 200,000 surgeries since the Company was founded. We remain dedicated to helping children throughout the world and driving increased value for our stakeholders in 2021 and beyond.”
Fourth Quarter and Full Year 2020 Financial Results
Total revenue for the fourth quarter of 2020 was
Total revenue for 2020 was
Trauma and Deformity revenue for the fourth quarter of 2020 was
Trauma and Deformity revenue for 2020 was
Gross profit for the fourth quarter of 2020 was
Total operating expenses for the fourth quarter of 2020 were
Net interest expense for the fourth quarter of 2020 was
Net loss from continuing operations for the fourth quarter of 2020 was (
Net loss from continuing operations for 2020 was (
The weighted average number of diluted shares outstanding for the three-month period ended December 31, 2020 was 19,118,276 shares.
In the fourth quarter of 2020, we had 171 sales representatives up
The change in property and equipment during the fourth quarter of 2020 was
As of December 31, 2020, cash, cash equivalents, short-term investments and restricted cash were
Full Year 2021 Financial Guidance
For full year 2021, we expect to see very significant growth over full year 2020 with sales reaching
Conference Call
OrthoPediatrics will host a conference call on Thursday, March 11, 2021, at 8:00 a.m. ET to discuss the results. The dial-in numbers are (855) 289-4603 for domestic callers and (614) 999-9389 for international callers. The conference ID number is 9362699. A live webcast of the conference call will be available online from the investor relations page of the OrthoPediatrics’ corporate website at www.orthopediatrics.com.
A replay of the webcast will remain available on OrthoPediatrics’ website, www.orthopediatrics.com, until the Company releases its first quarter 2021 financial results. In addition, a telephonic replay of the call will be available until March 18, 2021. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. Please use the replay conference ID number 9362699.
Forward-Looking Statements
This press release 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," "believe," "estimate," "project," "target," "predict," "intend," "future," "goals," "potential,” "objective," "would" and other similar expressions. Forward-looking statements involve risks and uncertainties, many of which are beyond OrthoPediatrics’ control. Important factors could cause actual results to differ materially from those in the forward-looking statements, including, among others: the risks related to COVID-19, the impact such pandemic may have on the demand for our products, and our ability to respond to the related challenges; and the risks, uncertainties and factors set forth under "Risk Factors" in OrthoPediatrics’ Annual Report on Form 10-K filed with the SEC on March 5, 2020, as updated and supplemented by our other SEC reports filed from time to time. Forward-looking statements speak only as of the date they are made. OrthoPediatrics assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable securities laws.
Use of Non-GAAP Financial Measures
This press release includes the non-GAAP financial measure of Adjusted EBITDA, which differs from financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Adjusted EBITDA in this release represents net loss from continuing operations, plus interest expense, net plus other expense, provision for income taxes (benefit), depreciation and amortization, stock-based compensation expense, fair value adjustment of contingent consideration, acquisition related costs and accrued legal settlements costs. Adjusted EBITDA is presented because the Company believes it is a useful indicator of its operating performance. Management uses the metric as a measure of the Company’s operating performance and for planning purposes, including financial projections. The Company believes this measure is useful to investors as supplemental information because it is frequently used by analysts, investors and other interested parties to evaluate companies in its industry. The Company believes Adjusted EBITDA is useful to its management and investors as a measure of comparative operating performance from period to period. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to, or superior to, net income or loss as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed to imply that the Company’s future results will be unaffected by unusual or non-recurring items. In addition, the measure is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect certain cash requirements such as debt service requirements, capital expenditures and other cash costs that may recur in the future. Adjusted EBITDA contains certain other limitations, including the failure to reflect our cash expenditures, cash requirements for working capital needs and other potential cash requirements. In evaluating Adjusted EBITDA, you should be aware that in the future the Company may incur expenses that are the same or similar to some of the adjustments in this presentation. The Company’s presentation of Adjusted EBITDA should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on the Company’s GAAP results in addition to using Adjusted EBITDA on a supplemental basis. The Company’s definition of this measure is not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation. The schedules below contain a reconciliation of Net Loss from continuing operations to non-GAAP Adjusted EBITDA.
About OrthoPediatrics Corp.
Founded in 2006, OrthoPediatrics is an orthopedic company focused exclusively on advancing the field of pediatric orthopedics. As such it has developed the most comprehensive product offering to the pediatric orthopedic market to improve the lives of children with orthopedic conditions. OrthoPediatrics currently markets 35 surgical systems that serve three of the largest categories within the pediatric orthopedic market. This product offering spans trauma and deformity, scoliosis, and sports medicine/other procedures. OrthoPediatrics’ global sales organization is focused exclusively on pediatric orthopedics and distributes its products in the United States and 44 countries outside the United States. For more information, please visit www.orthopediatrics.com.
Investor Contact
The Ruth Group
Christine Petraglia
SVP Investor Relations
(917) 633-8980
ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 28,758 | $ | 70,777 | ||||
| Restricted cash | 1,374 | 1,250 | ||||||
| Short term marketable securities | 55,141 | - | ||||||
| Accounts receivable - trade, less allowance for doubtful accounts of | 17,212 | 16,003 | ||||||
| Inventories, net | 52,989 | 38,000 | ||||||
| Notes Receivable | 337 | 564 | ||||||
| Prepaid expenses and other current assets | 2,618 | 1,464 | ||||||
| Total current assets | 158,429 | 128,058 | ||||||
| Property and equipment, net | 27,227 | 21,349 | ||||||
| Other assets: | ||||||||
| Amortizable intangible assets, net | 50,284 | 14,484 | ||||||
| Goodwill | 70,511 | 13,773 | ||||||
| Other intangible assets | 13,961 | 4,490 | ||||||
| Total other assets | 134,756 | 32,747 | ||||||
| Total assets | $ | 320,412 | $ | 182,154 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable - trade | $ | 10,038 | $ | 6,467 | ||||
| Accrued compensation and benefits | 4,540 | 4,349 | ||||||
| Accrued legal settlements | 6,342 | - | ||||||
| Current portion of long-term debt with affiliate | 131 | 124 | ||||||
| Current portion of acquisition installment payable | 12,233 | - | ||||||
| Other current liabilities | 1,744 | 2,723 | ||||||
| Total current liabilities | 35,028 | 13,663 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt with affiliate, net of current portion | 1,044 | 26,067 | ||||||
| Acquisition installment payable, net of current portion | 12,784 | - | ||||||
| Contingent consideration | 30,710 | - | ||||||
| Deferred income taxes | 5,755 | - | ||||||
| Operating lease liabilities, net of current portion | 323 | 63 | ||||||
| Total long-term liabilities | 50,616 | 26,130 | ||||||
| Total liabilities | 85,644 | 39,793 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity: | ||||||||
| Common stock, | 5 | 4 | ||||||
| Additional paid-in capital | 388,622 | 271,182 | ||||||
| Accumulated deficit | (161,766 | ) | (128,822 | ) | ||||
| Accumulated other comprehensive income (loss) | 7,907 | (3 | ) | |||||
| Total stockholders' equity | 234,768 | 142,361 | ||||||
| Total liabilities and stockholders' equity | $ | 320,412 | $ | 182,154 | ||||
ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In Thousands, Except Share and Per Share Data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||
| Net revenue | $ | 18,924 | $ | 18,952 | $ | 71,078 | $ | 72,552 | |||||||
| Cost of revenue | 3,806 | 4,502 | 16,047 | 17,933 | |||||||||||
| Gross profit | 15,118 | 14,450 | 55,031 | 54,619 | |||||||||||
| Operating expenses: | |||||||||||||||
| Sales and marketing | 9,433 | 8,360 | 31,854 | 31,284 | |||||||||||
| General and administrative | 10,036 | 7,216 | 38,317 | 26,664 | |||||||||||
| Legal settlement expenses | 6,342 | - | 6,342 | - | |||||||||||
| Research and development | 2,050 | 1,905 | 5,273 | 5,748 | |||||||||||
| Total operating expenses | 27,861 | 17,481 | 81,786 | 63,696 | |||||||||||
| Operating loss | (12,743 | ) | (3,031 | ) | (26,755 | ) | (9,077 | ) | |||||||
| Other expenses: | |||||||||||||||
| Interest expense, net | 624 | 1,306 | 3,412 | 3,538 | |||||||||||
| Fair value adjustment of contingent consideration | 1,701 | - | 3,520 | - | |||||||||||
| Other expense (income) | (332 | ) | (8 | ) | (20 | ) | 70 | ||||||||
| Total other expenses | 1,993 | 1,298 | 6,912 | 3,608 | |||||||||||
| Loss before income taxes | (14,736 | ) | (4,329 | ) | (33,667 | ) | (12,685 | ) | |||||||
| Provision for income taxes (benefit) | (723 | ) | - | (723 | ) | - | |||||||||
| Net loss from continuing operations | (14,013 | ) | (4,329 | ) | (32,944 | ) | (12,685 | ) | |||||||
| Net loss from discontinued operations | - | 1,100 | - | 1,046 | |||||||||||
| Net loss | $ | (14,013 | ) | $ | (5,429 | ) | $ | (32,944 | ) | $ | (13,731 | ) | |||
| Weighted average common shares - basic and diluted | 19,118,276 | 15,031,256 | 18,056,828 | 14,624,194 | |||||||||||
| Net loss from continuing operations per share attributable to common stockholders - basic and diluted | $ | (0.73 | ) | $ | (0.29 | ) | $ | (1.82 | ) | $ | (0.87 | ) | |||
| Net loss from discontinued operations per share attributable to common stockholders - basic and diluted | $ | - | $ | (0.07 | ) | $ | - | $ | (0.07 | ) | |||||
| Net loss per share attributable to common stockholders - basic and diluted | $ | (0.73 | ) | $ | (0.36 | ) | $ | (1.82 | ) | $ | (0.94 | ) | |||
ORTHOPEDIATRICS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In Thousands)
| For the Twelve Months Ended December 31, | |||||||
| 2020 | 2019 | ||||||
| OPERATING ACTIVITIES | |||||||
| Net loss | $ | (32,944 | ) | $ | (13,731 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Loss on sale of assets held for sale | - | 210 | |||||
| Depreciation and amortization | 8,010 | 4,671 | |||||
| Stock-based compensation | 6,196 | 2,603 | |||||
| Fair value adjustment of contingent consideration | 3,520 | - | |||||
| Acquisition installment payable | 2,397 | - | |||||
| Deferred income taxes | (723 | ) | - | ||||
| Changes in certain current assets and liabilities: | |||||||
| Accounts receivable - trade | (451 | ) | (5,820 | ) | |||
| Inventories | (12,070 | ) | (9,767 | ) | |||
| Prepaid expenses and other current assets | (719 | ) | (137 | ) | |||
| Accounts payable - trade | 3,071 | 2,401 | |||||
| Accrued legal settlements | 6,342 | - | |||||
| Accrued expenses and other liabilities | (1,074 | ) | 1,946 | ||||
| Other | (85 | ) | (1 | ) | |||
| Net cash used in operating activities - continuing operations | (18,530 | ) | (17,625 | ) | |||
| Net cash provided by operating activities - discontinued operations | - | (144 | ) | ||||
| Net cash used in operating activities | (18,530 | ) | (17,769 | ) | |||
| INVESTING ACTIVITIES | |||||||
| Acquisition of Telos, net of cash acquired | (1,670 | ) | - | ||||
| Acquisition of ApiFix, net of cash acquired | (1,723 | ) | - | ||||
| Acquisition of Band-Lok intangible assets | (796 | ) | - | ||||
| Acquisition of Vilex and Orthex, net of cash acquired | - | (49,836 | ) | ||||
| Purchases of licenses | - | (270 | ) | ||||
| Purchase of short term investments | (55,000 | ) | - | ||||
| Purchases of property and equipment | (10,504 | ) | (11,816 | ) | |||
| Net cash used in investing activities | (69,693 | ) | (61,922 | ) | |||
| FINANCING ACTIVITIES | |||||||
| Payments on note with affiliate | (25,000 | ) | - | ||||
| Proceeds from issuance of debt with affiliate | - | 30,000 | |||||
| Proceeds from issuance of common stock, net of issuance costs | 70,207 | 59,996 | |||||
| Proceeds from exercise of stock options | 1,650 | 1,141 | |||||
| Payments on mortgage notes | (125 | ) | (118 | ) | |||
| Net cash provided by financing activities | 46,732 | 91,019 | |||||
| Effect of exchange rate changes on cash | (404 | ) | 8 | ||||
| NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH | (41,895 | ) | 11,336 | ||||
| Cash and restricted cash, beginning of period | $ | 72,027 | $ | 60,691 | |||
| Cash and restricted cash, end of period | $ | 30,132 | $ | 72,027 | |||
| SUPPLEMENTAL DISCLOSURES | |||||||
| Cash paid for interest | $ | 1,233 | $ | 4,229 | |||
| Transfer of instruments from property and equipment to inventory | $ | 415 | $ | 1,037 | |||
| Issuance of common shares to acquire Vilex and Orthex | $ | - | $ | 10,000 | |||
| Issuance of common shares to acquire Telos | $ | 1,568 | $ | - | |||
| Issuance of common shares to acquire ApiFix | $ | 35,176 | $ | - | |||
| Issuance of common shares to acquire Band-Lok intellectual property | $ | 2,644 | $ | - | |||
| Divestiture consideration allocated to assets held for sale | $ | - | $ | 25,000 | |||
| Payment of Term Note B with revolving credit facility | $ | - | $ | 5,000 | |||
ORTHOPEDIATRICS CORP.
NET REVENUE BY GEOGRAPHY AND PRODUCT CATEGORY
(Unaudited)
(In Thousands)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
| Product sales by geographic location: | 2020 | 2019 | 2020 | 2019 | |||||||
| U.S. | $ | 17,853 | $ | 14,155 | $ | 62,966 | $ | 55,055 | |||
| International | 1,071 | 4,797 | 8,112 | 17,497 | |||||||
| Total | $ | 18,924 | $ | 18,952 | $ | 71,078 | $ | 72,552 | |||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||
| Product sales by category: | 2020 | 2019 | 2020 | 2019 | |||||||
| Trauma and deformity | $ | 11,278 | $ | 13,631 | $ | 47,677 | $ | 49,371 | |||
| Scoliosis | 6,636 | 4,891 | 20,738 | 21,485 | |||||||
| Sports medicine/other | 1,010 | 430 | 2,663 | 1,696 | |||||||
| Total | $ | 18,924 | $ | 18,952 | $ | 71,078 | $ | 72,552 | |||
ORTHOPEDIATRICS CORP.
RECONCILIATION OF NET LOSS FROM CONTINUING OPERATIONS TO NON-GAAP ADJUSTED EBITDA
(Unaudited)
(In Thousands)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Net loss from continuing operations | (14,013 | ) | (4,329 | ) | (32,944 | ) | (12,685 | ) | |||||
| Interest expense, net | 624 | 1,306 | 3,412 | 3,538 | |||||||||
| Other expense | (332 | ) | (8 | ) | (20 | ) | 70 | ||||||
| Provision for income taxes (benefit) | (723 | ) | - | (723 | ) | - | |||||||
| Depreciation and amortization | 2,314 | 1,405 | 8,010 | 4,671 | |||||||||
| Stock-based compensation | 1,484 | 707 | 6,196 | 2,603 | |||||||||
| Fair value adjustment of contingent consideration | 1,701 | - | 3,520 | - | |||||||||
| Acquisition related costs | - | - | 336 | 737 | |||||||||
| Accrued legal settlement costs | 6,342 | - | 6,342 | - | |||||||||
| Adjusted EBITDA | $ | (2,603 | ) | $ | (919 | ) | $ | (5,871 | ) | $ | (1,066 | ) | |
FAQ
What were OrthoPediatrics' revenue figures for 2020?
How did OrthoPediatrics perform in Q4 2020?
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What factors impacted OrthoPediatrics' revenue in 2020?
What was OrthoPediatrics' net loss in 2020?
