Orthofix Medical Inc. (OFIX) reported its first-quarter 2025 earnings, revealing a larger-than-expected loss per share and a slight revenue beat. The company posted an actual earnings per share (EPS) of -$1.35, significantly missing the forecast of -$0.55. Revenue came in at $193.6 million, slightly above the expected $191.01 million. Following the earnings announcement, Orthofix shares fell by 10.86% in pre-market trading, reflecting investor concerns over the earnings miss. According to InvestingPro data, two analysts have recently revised their earnings estimates downward for the upcoming period, though the company is still expected to return to profitability this year.
Key Takeaways
- Orthofix’s EPS was significantly below expectations, leading to a negative market reaction.
- Revenue slightly exceeded forecasts, suggesting strong sales performance.
- The stock price dropped by 10.86% in pre-market trading.
- The company is focusing on product innovation with several new launches planned.
- Orthofix plans to optimize its operations, aiming for annual savings of $3 million.
Company Performance
Orthofix’s performance in Q1 2025 showed a mixed picture. While the company achieved a 6% year-over-year growth in net sales on a constant currency basis, it struggled with profitability, as evidenced by the greater-than-expected loss per share. The pro forma non-GAAP adjusted EBITDA was $11.4 million, with an expanded EBITDA margin of approximately 200 basis points, indicating some operational improvements. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 2.57, though it trades at a relatively high EBITDA multiple of 61.24x. Orthofix continues to lead in the bone growth therapy market, supported by its comprehensive biologic portfolio.
Financial Highlights
- Revenue: $193.6 million, slightly above the forecast of $191.01 million.
- Earnings per share: -$1.35, missing the forecast of -$0.55.
- Cash balance: $60.5 million, including restricted cash.
- EBITDA margin: Expanded by 200 basis points.
Earnings vs. Forecast
Orthofix’s earnings per share of -$1.35 fell short of the forecasted -$0.55, marking a significant miss. The surprise percentage was approximately -145.45%, indicating a substantial deviation from expectations. In contrast, revenue slightly exceeded predictions, suggesting that while sales were strong, other factors, such as restructuring costs, impacted profitability.
Market Reaction
Following the earnings release, Orthofix’s stock dropped 10.86% to $12.07 in pre-market trading. This decline reflects investor disappointment with the earnings miss, despite the company’s revenue beat. According to InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels. Analyst targets range from $22 to $27.20, suggesting potential upside, though the stock’s performance was influenced by its proximity to a 52-week low of $10.50, highlighting the challenges Orthofix faces in regaining investor confidence. Get access to detailed valuation metrics and 12+ additional ProTips with an InvestingPro subscription.
Outlook & Guidance
Orthofix provided a full-year net sales guidance of $800-$816 million, implying a 5% constant currency growth. This builds on the company’s strong revenue trajectory, with InvestingPro data showing a 7.08% revenue growth over the last twelve months and a 12% compound annual growth rate over the past five years. The company expects a non-GAAP adjusted EBITDA of $82-$86 million and anticipates positive free cash flow in 2025. Gross margins are projected to be around 71%, with operating expenses expected to improve by 200 basis points. Upcoming product launches, such as the Reef L lateral lumbar interbody and the Meridian ALIF portfolio expansion, are part of Orthofix’s strategy to drive future growth.
Executive Commentary
CEO Massimo Colifiori emphasized the company’s focus on innovation, stating, "We are redefining the category of limb reconstruction." He also highlighted the TRULOC Elevate TBT system’s role in addressing challenging conditions. CFO Julie Andrews reiterated the company’s commitment to its long-range plan, emphasizing the importance of pursuing vital initiatives.
Risks and Challenges
- Restructuring costs: Orthofix expects one-time restructuring charges of approximately $8 million.
- Distributor transitions: Short-term revenue impacts are anticipated from changes in U.S. spine territories.
- Pricing pressures: Challenges from hospital account joint ventures may affect pricing.
- Market competition: The company faces strong competition in specialized orthopedic markets.
- Economic conditions: Macro-economic pressures could impact overall market demand.
Q&A
During the earnings call, analysts questioned the impact of distributor transitions on revenue growth and the potential long-term benefits. There were also inquiries about the $5 million reduction from the U.S. funded NGO business and how Orthofix plans to address pricing headwinds. The management expressed confidence in their strategies to drive long-term growth despite these challenges.
Full transcript - Orthofix Medical Inc (OFIX) Q1 2025:
Tina, Conference Operator: Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orthofix First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.
Thank you. I will now turn the call over to Julie Dewey. Please go ahead.
Julie Dewey, Chief IR and Communications Officer, Orthofix: Thank you, operator, and good morning, everyone. Welcome to Orthofix’s first quarter twenty twenty five earnings call. We appreciate you joining us. I’m Julie Dewey, Orthofix’s Chief IR and Communications Officer. Joining me on the call today are President and CEO, Massimo Colifiori and Chief Financial Officer, Julie Andrews.
Before we get started, please note that our earnings release and the supplemental presentation accompanying this call are available on the Events and Presentations page of the Investors section of our corporate website at orthofix.com. Also, this call is being broadcast live over the Internet to all interested parties, and an archived copy of this webcast will be available in the Investors section of our corporate website shortly after the conclusion of this call. During this call, we will be making forward looking statements that involve risks and uncertainties. All statements other than those of historical facts are forward looking statements. We do not undertake any obligation to revise or update such forward looking statements.
Factors that could cause actual results to differ materially are discussed in our most recent filings with the SEC and may be included in our future filings with the SEC. In addition, on today’s call, we will refer to various non GAAP financial measures. Please refer to today’s news release announcing our first quarter twenty twenty five results for information regarding our non GAAP results, including our reconciliations of these non GAAP financial measures to our U. S. GAAP results.
Additionally, and unless otherwise stated, all net sales percentage changes discussed will be on a pro form a same sales day, constant currency, year over year basis, excluding the impact from the discontinuation of the M6 artificial disc product lines and all results of operations that we will refer to will be on a non GAAP as adjusted basis. Moving to today’s agenda, Massimo will open with comments on our performance and business updates. Julie Andrews will then review the specifics of our first quarter results and our 2025 financial guidance. With that, I will now turn the call over to Massimo.
Massimo Colifiori, President and CEO, Orthofix: Thank you, Julie. Good morning, everyone, and thank you for joining us for our first quarter earnings call. I’ll spend some time providing business updates and information about our key initiatives before I turn it over to Julie Andrews to cover the specifics of our Q1 results and 2025 guidance. During the first quarter, we continued to execute the priorities that we outlined in our three year plan to transform our business and deliver on our commitment to drive disciplined profitable growth. On a same sales day basis, our first quarter pro form a net sales of $189,200,000 represent year over year constant currency growth of 6%.
I’m also pleased to report that we delivered another quarter of excellent progress in adjusted EBITDA margin expansion that exceeded expectations. As we move forward in 2025, I’m confident we are well positioned for profitable growth as our efforts to further optimize our Spine commercial channel begin to bear fruit and we continue to build on our financial foundation and prudently deploy capital to create long term value for our shareholders. Our excitement continues to build in our Orthopedics business and the greenfield opportunity we have to redefine the category of limb reconstruction, which I’ll discuss in more detail shortly, as well as prospect we have in our Bone Growth Therapies business to further capitalize on cross selling opportunities and drive penetration in the traction market with AXL Steel. Now I’d like to provide additional detail for each of our businesses. Our U.
S. Spinal Fixation business grew 5.4% on a same sales day basis. We are successfully accelerating targeted distributor transition in a few U. S. Territories in order to maximize our growth opportunity and more closely aligned with our strategic focus.
As a result, we did experience some short term incremental softness in biologics and spine fixation. This transition won’t be completed until later this year and will require some time to take full effect, but is expected to result in a stronger, more scalable commercial organization as we shift into our next phase of growth. Once our optimization efforts are completed, we expect growth to return to historical levels. During the quarter, we continue to gain share in product categories where we recently launched new products, including our ELIF, MIS and cervical fusion portfolios, all of which significantly outperformed the market. Beginning in Q2, we have several product launches planned, including the full launch of Reef L lateral lumber interbody and additional solution in our Meridian ALIF portfolio.
This new interbody design features our proprietary advanced surface technologies and expand our portfolio of lumbar interbody fusion products to address varying surgeon preference and patient anatomies. In parallel, we will integrate our hardware products with access and navigation, creating a comprehensive procedural solution to enhance efficiencies and predictabilities in the OR. At the same time, we continue to leverage our differentiated 7D flash navigation platform to create long standing relationships with our surgeon partners. With continued investment, we expect that our next generation advancements in enabling technology and our hardware portfolio will build upon this unique foundation and establish us as the partner of choice for surgeons seeking real time data driven intraoperative solutions in the OR. We believe that our comprehensive portfolio of spinal hardware, biologics and enabling technologies and steady cadence of innovation will enable us to attract top sales talent, increase exclusive distributor relationships and drive stickier relationships with surgeons and hospital accounts, which we expect to result in incremental product pull through as well as ASP lift from mix benefits.
Now turning to Bone Growth Therapies. On a same sales day basis, BGT net sales grew 7% overall in Q1 and investments in the fracture market sales channel drove 8% growth in BGT fracture with Axle Steam, bone growth therapy device to continuing to outperform the market. Our BGT business is focused on maximizing our market leading position with the most comprehensive portfolio and the most indications on bone growth stimulation devices in the market. We will continue to focus on cross selling with Orthopaedics and Spine, adding new market channels with established sales representative and driving penetration in the fracture market with AxleStim. Speaking of AxleStim, we received an earlier than anticipated FDA approval for our AxleStim two point zero in the first quarter.
This approval reinforces Orthofix position as the market leader in bone growth simulation and represents a significant advancement in low intensity pulse ultrasound technology as the first and only such device to incorporate remote therapeutic visibility through integration with the Steam on Track mobile app and physician portal. Axis Team two point zero is expected to be available later this year. I continue to be impressed by the commercial execution of the BGT team. Our global orthopedic business had a strong start to the year delivering constant currency growth of 13% on a same sales day basis in Q1 compared to prior year. U.
S. Orthopaedics benefited from strong execution and grew 12% also on a same sales day basis. Growth was led by the combination of our TRULOC and FITBOND products as well as growth in the galaxy fixation product family and Oscar bond cement removal products. As we covered in our last earnings call, Orthofix is redefining the category of limb reconstruction with a unique portfolio of solutions that empower surgeons to excel in limb preservation, deformity correction, limb lengthening and complex structure management. Together, these segments represent a market opportunity in excess of one point seven billion one of the fastest growing categories in orthopedics.
We are particularly excited about the upcoming full market release of the TRULOC Elevate TBT system, which is indicated to correct non unions and bony or soft tissue deformities or defects, which could include non healing wounds, ulcers and deep tissue wounds. According to the American Diabetes Association, over one hundred and sixty thousand amputations occur each year in The U. S. As a result of diabetic related complication, representing a sizable market opportunity of approximately 1,200,000,000 The TRULOC Elevate TBT system is currently in limited market release at selected centers in The U. S.
And Europe. Surgeons participating in the limited release are witnessing firsthand the transformative potential of this product and treating condition that previously would have almost certainly resulted in limb amputation and drastically reduced patients’ quality of life and their life expectancy. TRULOC ELEVATE is already making a real difference. We are continuing to prepare for a full market launch of Truloc Elevate in Q3. These include confirming reimbursement coding and actively gathering feedback from surgeons involved in the initial rollout.
This feedback will be crucial for successful full launch in the coming months. With over 90 TRULOC elevated case completed so far, surgery response has been overwhelmingly positive and interest from the orthopedic community continues to grow rapidly. TRULOC ELEVATE now enables surgeons to effectively address challenging condition in a patient’s extremity by allowing for an efficient and reproducible method to create a bond segment in the tibia that can be gradually destructed over a period of several days. Published clinical research has shown this approach improves blood circulation to the affected limb and promotes wound healing in diabetic foot, potentially reducing the need for an amputation, lowering associated mortality risk and alleviating the long term healthcare cost linked to limb loss. Thus, TRULOC Elevate offers the potential to not only be a limb and cost saving device, but most importantly a life saving solution to a challenging patient population.
In addition to TRULOC Elevate, Orthopedics growth in 2025 will be fueled by a number of new product introductions that we expect to capture additional market share with existing and new customers. These include the FITBON bond transport and lengthening nail, the only bone transport nail available in United States and the FITBON trochantering nail. We expect all of this product to be in full market release in the second half of twenty twenty five. Our focus on Limb Reconstriction is yielding significant results, particularly in The USA market and we anticipate this will be a key growth driver for Orthofix for many years to come. Overall, we are in great positions to capitalize on our recent product launch successes and deliver meaningful innovation to improve outcomes and efficiencies for our surgeon customers and their patients.
We have a healthy commercial pipeline that we believe is poised to deliver substantial revenue growth in the coming months. Importantly, the breadth and depth of Orthofix Spine and Orthopedic offerings provide multiple paths to grow the business as sustained above market rates. We remain the market leaders in bone growth therapies, have a comprehensive market leading biologic portfolio and differentiated products in several specialized orthopedic markets such as complex trauma reconstruction and limb deformity correction. Additionally, our broad and spine portfolio is world class and is fully supported by a highly differentiated and compelling enabling technology. Looking ahead, we are focused on three strategic priorities.
First, further sharpening our commercial execution to drive deeper market penetration through our comprehensive portfolio offering including the adoption of our 7D flash navigation system. Second, implementing projects to improve our gross margin and finally, focus on disciplined capital allocation, adjusted EBITDA expansion and positive free cash flow generation, ensuring we are well positioned to create long term value for our shareholders in 2025 and beyond. At the same time, we are confident that our emphasis responsible capital deployment within our businesses and deemphasizing areas where we have less scale or share will also drive our transformation, support profitable growth and increase penetration of our technology and product platforms in areas where we can win. In summary, after one year with this new management team, Orthofix is operating with greater discipline, executing our priorities and strengthening our balance sheet. I believe we are very well positioned to deliver on our commitment to drive profitable growth and innovation while increasing long term shareholder value.
With that, I’ll now turn the call over to Julie to review our first quarter financial results and our 2025 guidance.
Julie Andrews, Chief Financial Officer, Orthofix: Thank you, Massimo, and good morning, everyone. As we get started, all net sales growth rates that I referred to in my prepared comments will be on a pro form a constant currency same sales day basis over the prior year quarter and exclude the impact of net sales related to the discontinuation of the M6 artificial cervical and lumbar disc that we previously announced. These pro form a comparisons are non GAAP financial measures as described by Julie during the introduction of our call. As a reminder, this quarter had sixty three selling days, which was one less selling day than Q1 twenty twenty four. Please refer to the non GAAP reconciliations in our press release, and I strongly encourage you to review the information posted on our website.
We have provided you with information to assist you with your modeling and to provide you with pro form a information through the first quarter of twenty twenty five. During the first quarter, we continued to prioritize investment in innovation, rigorously allocating resources to high return opportunities to further sustain our share capture in US Spine and US Orthopedics and focus on improving margins and cash positioning the company for near and long term profitable growth. Global Spinal Implants, Biologics and Enabling Technologies first quarter pro form a net sales were $104,300,000 with year over year growth of 4% on a pro form a same sales day basis. These results were slightly below our expectations, primarily due to some incremental softness in biologics and spine fixation. In our U.
S. Spine Fixation business, procedure volume growth on a same sales day basis was 7%, which was partially offset by the outsized impact of a price decrease due to a joint venture between one of our largest hospital accounts in the Midwest and a large regional group purchasing organization that already had an ortho fixed pricing agreement in place. We will be working through this for the remainder of the year. Moving now to Bone Growth Therapies. BGT revenue grew 7% on a same sales day basis to $55,100,000 in Q1, driven by above market performance in both the spine and fracture channels.
BGT fracture growth was 8% on a same sales day basis, driven by investments in the fracture market sales channel. We do expect our BGT growth to remain above market growth rates, currently estimated to be 2% to three percent and continue to moderate somewhat as we move forward in 2025 due to our number one market position in the BGT Spine business and lapping the gains from surgeons acquired last year. We will continue to focus on adding new surgeons and competitive surgeon conversions in BGT Spine and continue our commercial focus in the BGT fracture market where we currently have a lower market penetration and see a substantial opportunity to drive new business with orthopedic surgeons. The global orthopedics business grew 13% to $29,800,000 in the first quarter led by 12% growth in The U. S.
As a result of strong performance across our portfolio as well as distributor expansion and sales channel investments. The international orthopedics business grew 14% versus prior year. As we’ve previously said, due to the nature of this business, particularly around the timing and volume of stocking distributor and tender orders, we expect to see variability from quarter to quarter in the growth rates. Pro form a non GAAP adjusted EBITDA excluding the impact of the discontinuation of M6 was $11,400,000 with pro form a adjusted EBITDA margin expanding approximately 200 basis points compared to reported non GAAP adjusted EBITDA for the first quarter of twenty twenty four. The discontinuation of M6, which has been a negative drag on our profitability in prior periods, drove the majority of the improvement in the quarter.
In addition, we continued our efforts to optimize our shared service functions, executing actions to deliver annual savings of $3,000,000 We remain encouraged by these results as we see our ability to drive leverage on sales growth materializing as we continue to focus on disciplined profitable growth. From a cash standpoint, our total cash balance including restricted cash at the end of Q1 totaled $60,500,000 As a reminder, the first quarter of each year is always a high cash outflow quarter, primarily due to the payment of the prior year’s annual bonuses and Q4 commissions. In addition, we had higher than normal cash severance payments related to the discontinuation of M6 and the rightsizing of our shared service functions. Excluding these items, uses of cash were in line with normal business operations and slightly better than the company’s projections. As we said on our last earnings call, Q1 was expected to be the lowest cash flow quarter of the year.
While we continue to expect to generate positive free cash flow, excluding the impact of restructuring charges related to M6 discontinuation for the full year 2025, we do not expect it to generate positive free cash flow in every quarter. As we announced on our Q4 earnings call, we are discontinuing the M6 C artificial disc and the M6 L artificial lumbar disc product lines. It is important to note that the M6 product lines were a headwind to the company’s top line revenue growth rate, gross margin, adjusted EBITDA and free cash flow. This product phase out is in line with our commitment to direct resources to more profitable growth opportunities. We have posted a pro form a P and L for M6 on our website to assist you with updating your models.
We will update it on a quarterly basis for the remainder of 2025. We expect to have one time cash restructuring charges of approximately $8,000,000 primarily due to the closure of the dedicated M6 manufacturing facility in Sunnyvale, California. We expect most of the charges to be incurred during 2025. We will continue to support customer demand in The U. S.
Market as we burn through remaining inventory. In addition, we intend to fulfill all requirements related to post market surveillance activities and meet our obligations with respect to pre market approval of M6 devices, including completion of the IDE study in The United States, which we expect to have an annual cost in the range of $2,000,000 Overall, we continue to be confident in our ability to drive profitable revenue growth moving forward. We remain focused on pursuing the vital few initiatives in our long range plan and prudently deploying capital and resources to areas where we have a differentiated advantage, all of which we believe will support the achievement of our three year financial targets and propel our business forward. Moving on to 2025 full year guidance. First, regarding tariffs.
Recognizing that this is still a fluid situation, we have exposure to tariffs in The EU, Canada, China and Taiwan. We now estimate our annual exposure to be approximately $3,000,000 to $4,000,000 which is better than our original estimate of $5,000,000 This estimate includes currently applicable tariffs as well as the additional tariffs that were announced on April 2 by The U. S. That would take effect following the ninety day pause and assume such tariffs remain in place. This exposure is very manageable, primarily reflected in cost of goods sold and already contemplated in our guidance.
We now expect full year net sales of $8.00 $8,000,000 to $816,000,000 which excludes sales from the discontinued M6 product lines, representing implied constant currency growth of 5% year over year at the midpoint of the range. While we no longer expect foreign exchange rates to have a negative impact, our updated guidance reflects the anticipated short term impact from the targeted distributor transitions that Massimo discussed earlier, which we believe will set us up for success and generate significant future returns. Our guidance also assumes a $5,000,000 negative impact from U. S. Funded nongovernmental organization, NGO business as compared to the full year 2024.
This guidance range is based on the current foreign currency exchange rates and does not take into account any additional potential exchange rate changes that may occur this year. We expect the majority of the impact from our revised net sales guidance to be reflected in the second quarter due to the timing of international stocking orders, the anticipated short term effect of the targeted distributor transitions and the quarterly impact from the reduction of U. S. Funded NGO revenue. We continue to expect full year 2025 non GAAP adjusted EBITDA of $82,000,000 to $86,000,000 This range includes the anticipated impact from the discontinuation of the N6 product lines that was previously announced in February 2025 and represents 190 basis points of EBITDA margin expansion at the midpoint of the range compared to 2024.
We also continue to expect to generate positive free cash flow for the full year 2025 excluding the impact of restructuring charges related to the discontinuation of the M6 product lines. Now for some specifics on individual line items for the P and L for 2025. We expect our gross margins to be approximately 71% consistent with previous estimates and in line with 2024. We now expect our operating expenses to improve by 200 basis points this year versus 2024 compared to the 100 basis points of improvement we previously communicated. This improvement is expected to come from our continued focus on disciplined investments as well as lower stock based compensation and depreciation and amortization.
Stock based compensation is now expected to be Stock range of $29,000,000 to $30,000,000 while depreciation and amortization is expected to decrease to $37,000,000 to $39,000,000 for the full year 2025. We still expect interest and other expenses to be approximately 5,000,000 per quarter. Throughout 2025, we will maintain a heightened focus on disciplined, profitable growth and free cash flow generation to build on our financial foundation and prudently deploy capital to create long term value for our shareholders. Now before we open the call for questions, let me turn it back to Massimo for concluding comments. Massimo?
Massimo Colifiori, President and CEO, Orthofix: Thanks, Julie. I want to thank our Orthofix team and our committed commercial partners for their effort in Q1. We believe our focused commercial strategy and broad differentiated technology combined with our robust innovation pipeline and our pace setting enabling technologies position us well to drive commercial execution and operational excellence, deliver on our financial commitments and create long term sustainable value for shareholders. I’m excited and energized about the path we have set for ourselves and the opportunities for the business to deliver exceptional value to our surgeons, their patients and our shareholders in 2025 and beyond. Operator, let’s now open the line for questions.
Tina, Conference Operator: Your first question comes from the line of Ryan Zimmerman with BTIG. Please go ahead.
Izzy, Analyst, BTIG: Hi. Good morning, everyone. This is Izzy on for Ryan. Thank you for taking the questions. So to start out, Massimo, I was wondering if you could talk about the rationale for the optimization within the Spine channel.
What prompted the decision to take this on right now? And if you could put a little bit of a finer point as to how long the process might take. This is a bit of a multiparty, so sorry about that. But are there any chance that these impacts could bleed into next year or any implications that we should keep in mind for the long range plan as a result of the optimization?
Massimo Colifiori, President and CEO, Orthofix: No. Definitely not. To give you more color, we’re entering when we enter the second year of our tenure, we believe that we’re a much stronger footing than when we started. Our balance sheet is very strong. We are making a lot of progress on our EBITDA expansion.
BGT keep performing. We’re redefining the orthopedics and where we are as you see we are start to achieve sustainable growth. So for us, it was the moment to really think about our Spine business and we want to start to be much more deliberate and intentional on how we see how we go to market. So given our strength, we realized that our current distribution network was already at capacity from the growth standpoint. So we are accelerating our transformation by investing in larger much more capital efficient commercial partner to drive the long term growth that we are expecting to create shareholder value.
And I can tell you that the commercial pipeline is already primed and ready to deliver substantial revenue growth starting later this year. It’s coming with some pain point short term, but again we believe that we can create higher growth business now investing in the right partner.
Izzy, Analyst, BTIG: That’s helpful. Thank you. And Julie, I heard your comments on the 2025 guidance, I was curious what is enabling you guys to maintain your adjusted EBITDA while lowering the top line?
Julie Andrews, Chief Financial Officer, Orthofix: Yeah. So, you know, as we mentioned, you know, we’ve been very focused on making sure that we’re making investments that have a return. We did do some rightsizing of shared service organization, at the beginning of the year as well, which was, you know, kind of delivering more on our synergies. As you remember, we had about 10,000,000 going into the year, remaining on synergies, and we’ve kind of, now taken actions for about an additional 6,000,000 of that. And so, you know, the combination of continuing to deliver on our synergies as well as, you know, looking at all of our costs and investing in what we’re going to get the highest return on.
Izzy, Analyst, BTIG: Understood. Thanks for taking the questions.
Julie Andrews, Chief Financial Officer, Orthofix: Thank you.
Tina, Conference Operator: Our next question comes from the line of Matthew Blackman with Stifel. Please go ahead.
Matthew Blackman, Analyst, Stifel: Good morning, everybody. Thanks for taking our questions. Maybe to start, Julie, you mentioned one less selling day. I just want make sure I get the simple math. Would that have amounted to something like a 0.5% growth headwind or about, call it, dollars 2,000,000 or $3,000,000 of a year over year drag in the first quarter?
Is that the right ballpark? And then I’ve got some follow ups.
Julie Andrews, Chief Financial Officer, Orthofix: Yeah. It it was a little bit over a point and a half of headwind, on the quarter growth rate.
Matthew Blackman, Analyst, Stifel: K. I appreciate that. Any and, I guess, are there any other, quarters, this year that we should be sensitive to in terms of days, selling days, versus last year?
Julie Andrews, Chief Financial Officer, Orthofix: No. The remaining quarters all have the same days as prior years.
Matthew Blackman, Analyst, Stifel: Okay. Thank you for that. And then I just want to make sure I wrap in my head, arms, whatever you want to use around the moving pieces on the updated guide as well as the first quarter. So revenue for the full year comes out about $10,000,000 at the midpoint, 5,000,000. I think very clearly federal funding being cut.
The remaining five, because you obviously mentioned the channel optimization initiatives, but then you also mentioned the pricing headwind in spine from one particular customer. Can you just maybe put a little bit more detail against each of those buckets? And I guess the last piece is, of all these disruptions, you mentioned some in the first quarter in the spine and the biologics business and then there’s the channel optimization and the pricing. Did we see any of this impact in the first quarter? So for instance, that $10,000,000 I know you said a lot of it’s in the second quarter, but do we already absorb some of that $10,000,000 headwind here in the first quarter?
That’s, those are my three questions. Sorry about all that.
Julie Andrews, Chief Financial Officer, Orthofix: That’s fine. Yeah. So let me try to, to unpack that. So, you know, out of the takedown, yeah, 5,000,000 is related to The US funded NGO business. The remainder is really, spine and biologics, I would say, channel disruption.
The price we primarily, you know, had included in our original guidance. It’s a little steeper than we originally, but I would say that’s that was in our original guide. We did see, yeah. We did take some of that in q one, both the price and the softness, in the distributor, channel. We we did see some of that in q one, but we expect the majority of it to be in q two.
And then if you think about the 5,000,000 from NGO, that was they generally placed a quarterly order, so that’s gonna spread evenly throughout the year. So, you know, we had a million and a half or so of that in q one, and you’ll see that throughout the remainder of each year each quarter of this year, for that as well as far as we are aware at this point.
Matthew Blackman, Analyst, Stifel: Okay. And if I could just add just to make sure I’m doing all that math right. I mean, it sounds like the first quarter, if you add back the selling days difference, which I don’t think we had contemplated, and then some of those moving pieces, you’re sort of excluding m six still in the in the low one nineties. Is that sort of the right way to think about it if I just add back some of that stuff?
Julie Andrews, Chief Financial Officer, Orthofix: Yeah. That would be the right way to think about it, Matt.
Matthew Blackman, Analyst, Stifel: Okay. Thank you very much. I’ll get back in queue.
Julie Andrews, Chief Financial Officer, Orthofix: Okay. Thank you.
Tina, Conference Operator: Our next question comes from the line of Caitlin Cronin with Canaccord Genuity. Please go ahead.
Caitlin Cronin, Analyst, Canaccord Genuity: Taking the questions. I guess just to start off, just a quick clarifying question for the NGO impact, where is that going to hit specifically within you know, the different segments? And then just with the the guidance change, really, any thoughts on, you know, the longer term guidance and the the risk to to that staying the same?
Julie Andrews, Chief Financial Officer, Orthofix: Yeah. So the NGO business is ortho. So it will be in the international ortho business, is where you would see that. And then we are not updating our long term guidance at this point. We’ll provide an update on our q four call.
Caitlin Cronin, Analyst, Canaccord Genuity: Okay. Great. And then just, a follow-up. Any more color on 70 this quarter and kind of the the capital environment?
Julie Andrews, Chief Financial Officer, Orthofix: Yeah. I mean, we’re still continuing to make progress with 70. We’re focused you know, our focus is really on earn outs because we believe that has the best return for us in the long term with the pull through to our spine business. But but no specific updates as it relates to the capital environment.
Izzy, Analyst, BTIG: Great. Thanks.
Julie Andrews, Chief Financial Officer, Orthofix: Thanks, Caitlin.
Tina, Conference Operator: As a reminder, press star one to ask a question. And our next question comes from the line of Jeffrey Cohen with Ladenburg. Please go ahead.
Aaron, Analyst, Ladenburg: Good morning. Thank you for taking our questions. I guess two from Aaron. I guess, firstly, could you talk about a sales team two point o a little bit? We’re pretty clear on timing, but could you talk about some of the functionality that’s available on the unit, and could you talk about the the form factor and manufacturing?
Sounds like thanks.
Massimo Colifiori, President and CEO, Orthofix: Look. Access team two point o, what it does, it pretty much connects to it connects to our physician our our our physician portal’s team on track. So it’s gonna it’s gonna do what all of the other system that we sell do. So give the opportunity to the surgeon to keep the follow the patient during the utilization of the the device to make sure that the patient is compliant in the monitor progress. So I think that this one is going to help us because it’s give like it’s something that also the the the physician can can bill.
I can that given that there is a DRG code for it. So, a great opportunity for us to keep pushing into the specific market segment.
Aaron, Analyst, Ladenburg: So there won’t be any changes as far as the functionality in the settings of the actual unit?
Massimo Colifiori, President and CEO, Orthofix: No. It’s just the integration with Team OnTrak.
Aaron, Analyst, Ladenburg: Got it. Perfect. Okay. And then as probably last month, can you talk about the the TrueLock system a little bit as far as the cases that’s been done? What’s being measured as far as data and outcomes?
And how many SKUs would you envision having when when launched or launching this year?
Massimo Colifiori, President and CEO, Orthofix: Yes. The SKUs of the TrueLock TBT is pretty much similar to all our other systems. So it’s pretty much is one SKU with some accessories. And right now we are in a limited clinical release that is doing very well. So we are having a lot of interest of surgeon that are going to help us to collect data to demonstrate the benefit of our of this new of this technique.
There are already a good amount of literature available about the benefit. But of course, we want to make sure that we keep pushing this highly differentiable procedure that can help us to enter a market segment that is pretty large. And as I said, there are 160,000 amputation that are happening in United States because of diabetes, because of diabetic foot. And we think that this procedure can be game changing. So something that we are very excited about.
And like I said already we did Dani cases just in a very limited market release. So a great opportunity for us.
Aaron, Analyst, Ladenburg: Perfect. Thanks for taking my questions.
Tina, Conference Operator: There are no further questions at this time. I will now turn the call back over to Julie Dewey for closing remarks.
Julie Dewey, Chief IR and Communications Officer, Orthofix: Thanks, everybody, for joining us today. We appreciate your time and interest. If you have more questions, please reach out, and we’ll look forward to talking to you next quarter. This concludes our call.
Tina, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
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