Orthofix Medical Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
OFIX$7.87-11.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000950170-24-091200
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000950170-24-122782
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 149 previous paragraphs and 153 current paragraphs.
54 unchanged; 65 reworded; 32 added; 28 removed; 2 previous and 2 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
We are a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, we deliver exceptional experiences and life-changing solutions to patients around the world. We offer a comprehensive portfolio of spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies, including the 7D FLASH navigation system. To learn more, visit Orthofix.com and follow on LinkedIn. Information included on our website is not incorporated into, or otherwise creates a part of, this report.
Current report
Bone Growth Therapies net sales growth of 9% and Bone Growth Therapies Fracture growth of 13% compared to third quarter 2023
Current report
U.S. Orthopedics net sales growth of 15% compared to third quarter of 2023
Current report
Entered into record number of 7D FLASH Navigation System earnout agreements and matched record for highest number of 7D placements in any quarter to date
Current report
Achieves free cash flow of $5.9 million in third quarter 2024, a significant improvement in cash usage compared to previous quarters
Current report
Announces new $275 million credit facility that replaces existing financing and further optimizes our capital structure to support long-term profitable growth
Current report
Net sales of $166.1 million, an increase of $11.8 million or 7.6%
Current report
Net sales of $495.4 million, an increase of $33.9 million or 7.3%
Current report
Net sales of $30.5 million, an increase of $0.8 million or 2.9%
Current report
International decline of $0.4 million, or (1.8)% on a constant currency basis, primarily driven by the timing of certain tender offers and stocking distributor orders
Current report
Net sales of $88.4 million, an increase of $3.7 million or 4.4%
Current report
Gross profit increased $15.3 million
Current report
Gross profit increased $47.4 million
Current report
Sales and marketing expense increased $1.6 million
Current report
Sales and marketing expense increased $8.9 million
Current report
General and administrative expense increased $6.4 million
Current report
General and administrative expense decreased $10.9 million
Current report
Research and development expense decreased $1.3 million
Current report
Research and development expense decreased $6.5 million
Current report
Acquisition-related amortization and remeasurement increased $3.0 million
Current report
Acquisition-related amortization and remeasurement increased $8.3 million
Current report
Interest expense, net increased $3.6 million
Current report
Other expense, net increased $0.2 million
Current report
Interest expense, net increased $10.6 million
Current report
Other expense, net increased $4.6 million
Current report
Decrease of $1.7 million associated with the gain recognized on conversion of the Neo Medical convertible loan into shares of equity
Current report
On November 7, 2024, the Company, as borrower, and its U.S. subsidiaries entered into a $275 million secured credit agreement (the “New Credit Agreement”) with Oxford Finance LLC, as administrative agent and as collateral agent (“Oxford”) and certain lenders party thereto, including Oxford and K2 Healthventures LLC. Certain of the Company’s foreign subsidiaries are expected to join the New Credit Agreement as guarantors shortly after the signing date. The New Credit Agreement provides for a $160 million senior secured term loan (the “Initial Term Loan”), and a $65 million senior secured delayed draw term loan facility (the “Term B Loan”). Draws under the Term B Loan are at the Company’s option from January 1, 2025 through June 30, 2026, subject to, among other conditions, the Company’s continuing compliance with a pro-forma total debt-to-EBITDA leverage ratio of less than 4.0x. EBITDA is a non-GAAP financial measure which represents earnings before interest income (expense), income taxes, depreciation, amortization, and other negotiated addbacks and adjustments. In addition, at Oxford's discretion, an additional $50 million of draw capacity is available to the Company, through January 1, 2029 (the “Term C Loan” and, together with the Term B Loan, the “Delayed Draw Term Loans” and collectively with the Initial Term Loan, the “Credit Facilities”). The Initial Term Loan and Delayed Draw Term Loans, to the extent ultimately drawn, will each mature in November 2029, following an interest-only payment period ending December 2028, and monthly amortization of principal and accrued interest between January 2029 and November 2029.
Current report
The Credit Facilities will be secured by a perfected first priority lien, or the equivalent security interest in each applicable jurisdiction, on substantially all of the assets of the Company and the applicable guarantors (subject to customary carveouts), including their respective U.S. intellectual property assets.
Current report
The Company expects to promptly fund the Initial Term Loan under the New Credit Agreement to repay all amounts outstanding under the Revolving Credit Facility with Blue Torch Finance LLC and terminate the Financing Agreement with Blue Torch. In addition to the repayment of existing debt, borrowings under the New Credit Agreement may be used for general corporate purposes.
Current report
Borrowings under the Credit Facilities bear interest at a percentage rate equal to the greater of 8.75% or 5.75% plus the one-month term SOFR rate. A facility fee equal to 1.5% of each applicable funded loan tranche is due at the time of funding of such respective tranche, and a 0.5% unused line fee is payable annually on the Term B Loan.
Current report
The New Credit Agreement contains customary affirmative and negative covenants, including limitations on the Company’s and its subsidiaries’ ability to incur additional debt, grant or permit additional liens, make certain investments and acquisitions, merge or consolidate with others, dispose of certain assets, pay dividends and distributions, pay subordinated indebtedness, and enter into affiliate transactions, as well as financial covenants that the Company (i) possess at least $45 million of unrestricted cash at the time the Initial Term Loan is funded and thereafter maintain $15 million of unrestricted cash in U.S.-based accounts, and (ii) maintain a maximum total debt-to-EBITDA leverage ratio no greater than 4.0x during the term of the facility.
Current report
The Company believes it will be in compliance with the covenants in future fiscal quarters. However, there can be no assurance that the Company will be in such compliance, and if it is not, the failure to do so could result in an event of default, which could have a material adverse effect on the Company’s financial position in the event that it continues to have significant amounts drawn under the Credit Facilities at such time.
Removed paragraphs (28)
Previous report
Following our merger (the "Merger") with SeaSpine Holdings Corporation ("SeaSpine"), which was completed in January 2023, we are a leading global spine and orthopedics company with a comprehensive portfolio of biologics, innovative spinal hardware, bone growth therapies, specialized orthopedic solutions, and a leading surgical navigation system. Headquartered in Lewisville, Texas, our spine and orthopedic products are distributed in more than 60 countries via our sales representatives and distributors. For more information, please visit www.Orthofix.com. Information included on our website is not incorporated into, or otherwise creates a part of, this report.
Previous report
Bone Growth Therapies net sales growth of 12% compared to second quarter 2023, marking six consecutive quarters with double-digit net sales increases
Previous report
Global Orthopedics net sales growth of 5% on a reported basis and 6% on a constant currency basis compared to second quarter 2023
Previous report
Significant improvement in cash usage, paving the way for earlier than expected positive free cash flow for the second half of 2024
Previous report
Announced appointments of four new executive team members, further strengthening the breadth and depth of the Company's leadership team
Previous report
Net sales of $168.0 million, an increase of $10.1 million or 6.4%
Previous report
Net sales of $329.3 million, an increase of $22.1 million or 7.2%
Previous report
Net sales of $30.6 million, an increase of $1.5 million or 5.3%
Previous report
International growth of $1.3 million, or 5.9% on a constant currency basis, primarily driven by recent product launches in Europe
Previous report
Net sales of $57.9 million, an increase of $2.9 million or 5.2%
Previous report
Gross profit increased $15.2 million
Previous report
Gross profit increased $32.1 million
Previous report
Sales and marketing expense increased $1.0 million
Previous report
Sales and marketing expense increased $7.2 million
Previous report
General and administrative expense decreased $0.2 million
Previous report
Decrease in integration-related expenses of $1.1 million compared to prior year comprised professional and advisor fees and severance and retention costs. In addition, general and administrative expenses were further reduced by the realization of Merger-related synergies
Previous report
Decrease of $0.8 million driven by a favorable change in litigation and investigation related costs, including the release of a $2.5 million accrual in the second quarter of 2024
Previous report
General and administrative expense decreased $17.3 million
Previous report
Research and development expense decreased $1.4 million
Previous report
Research and development expense decreased $5.2 million
Previous report
Acquisition-related amortization and remeasurement increased $4.1 million
Previous report
Acquisition-related amortization and remeasurement increased $5.3 million
Previous report
Interest expense, net increased $3.7 million
Previous report
Other income (expense), net decreased $2.5 million
Previous report
Interest expense, net increased $6.9 million
Previous report
Other income (expense), net decreased $4.4 million
Previous report
Partially offset by a $0.3 million increase associated with the reversal of a previously recognized estimate of expected credit losses recognized on the Neo Medical convertible loan
Previous report
The decrease in tax expense compared to the prior year period is partially attributable to amortization expense on long lived intangible assets offset by withholding tax in the prior year of $0.6 million that did not recur in 2024
Reworded paragraphs (65)
Previous wording
Notable financial metrics in the second quarter of 2024 and recent achievements include the following:
Current wording
Notable financial metrics in the third quarter of 2024 and recent achievements include the following:
Previous wording
Second quarter 2024 net sales of $198.6 million, an increase of 6% on a reported and constant currency basis compared to second quarter 2023
Current wording
Third quarter 2024 net sales of $196.6 million, an increase of 7% on a reported and constant currency basis compared to third quarter 2023
Previous wording
U.S. Spine Fixation net sales growth of 12%, driven by distribution expansion and further penetration in existing accounts
Current wording
U.S. Spine Fixation net sales growth of 18% compared to third quarter 2023, driven by distribution expansion and further penetration in existing accounts
Previous wording
Spinal Implants, Biologics, and Enabling Technologies is comprised of a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, which includes one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments and image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, primarily within the U.S. for Biologics.
Current wording
Spinal Implants, Biologics, and Enabling Technologies is comprised of a broad portfolio of spine fixation and motion preservation implant products used in surgical procedures of the spine, which includes one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments and image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.
Previous wording
Bone Growth Therapies net sales increased $6.5 million, or 12.3%, largely driven by (i) an increase in gross order volumes resulting from our continued investment in our direct sales channel for both the spine and fracture markets, (ii) capitalization of cross-selling opportunities, and (iii) continued growth and adoption of AccelStim, which is used in the healing of fresh and nonunion fractures
Current wording
Bone Growth Therapies net sales increased $4.6 million, or 8.6%, largely driven by (i) an increase in gross order volumes resulting from our continued investment in our direct sales channel for both the spine and fracture markets, (ii) capitalization of cross-selling opportunities, and (iii) continued growth and adoption of AccelStim, which is used in the healing of fresh and nonunion fractures
Previous wording
Spinal Implants, Biologics, and Enabling Technologies net sales increased $10.9 million, or 5.3%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants and Biologics, which saw growth in each of our cervical, interbody, thoracolumbar, and demineralized bone matrices franchises
Current wording
Spinal Implants, Biologics, and Enabling Technologies net sales increased $7.2 million, or 7.1%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants, which saw growth in each of our cervical, interbody, and thoracolumbar franchises
Previous wording
Bone Growth Therapies net sales increased $11.2 million or 11.2%, driven by (i) an increase in gross order volumes resulting from our continued investment in our direct sales channel for both the spine and fracture markets, (ii) capitalization of cross-selling opportunities, and (iii) continued growth and adoption of AccelStim
Current wording
Bone Growth Therapies net sales increased $15.8 million or 10.3%, driven by (i) an increase in gross order volumes resulting from our continued investment in our direct sales channel for both the spine and fracture markets, (ii) capitalization of cross-selling opportunities, and (iii) continued growth and adoption of AccelStim
Previous wording
Spinal Implants, Biologics, and Enabling Technologies net sales increased $3.6 million, or 3.4%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants and Biologics, which saw growth in each of our cervical, interbody, thoracolumbar, and demineralized bone matrices franchises
Current wording
Spinal Implants, Biologics, and Enabling Technologies net sales increased $18.1 million, or 5.9%, primarily due to increased sales growth from new and existing high-volume distribution partners, particularly within Spinal Implants and Biologics, which saw growth in each of our cervical, interbody, thoracolumbar, and demineralized bone matrices franchises
Previous wording
Global Orthopedics offers products and solutions that allow physicians to successfully treat a variety of orthopedic conditions specifically related to limb reconstruction and deformity correction unrelated to the spine. Global Orthopedics distributes its products world-wide through a network of distributors and sales representatives to sell orthopedic products to hospitals and healthcare providers.
Current wording
Global Orthopedics offers products and solutions that allow physicians to successfully treat a variety of orthopedic conditions specifically related to limb reconstruction and deformity correction unrelated to the spine. Global Orthopedics distributes its products worldwide through a network of distributors and sales representatives to sell orthopedic products to hospitals and healthcare providers.
Previous wording
U.S. growth of $2.0 million, or 14.7%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from our comprehensive surgeon education program
Current wording
U.S. growth of $1.1 million, or 15.0%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from growth within our OSCAR PRO product line
Previous wording
Partially offset by a decrease of $0.3 million due to movement in foreign currency exchange rates, which had an unfavorable impact on net sales in the second quarter of 2024
Current wording
Increase of $0.1 million due to movement in foreign currency exchange rates, which had a favorable impact on net sales in the third quarter of 2024
Previous wording
U.S. growth of $0.5 million, or 7.2%, largely due to investments made in recent product launches and commercial execution within our sales channel and from our comprehensive surgeon education program
Current wording
U.S. growth of $3.2 million, or 14.8%, largely due to investments made in recent product launches, commercial execution within our sales channel, and from growth within our OSCAR PRO product line
Previous wording
International growth of 1.9% on a constant currency basis, driven by recent product launches in Europe and offset by the timing of certain stocking distributor orders
Current wording
International growth of 0.6% on a constant currency basis, driven by recent product launches in Europe and offset by the timing of certain tender offers and stocking distributor orders
Previous wording
Increase of $0.1 million due to movement in foreign currency exchange rates, which had a favorable impact on net sales in 2024
Current wording
Increase of $0.2 million due to movement in foreign currency exchange rates, which had a favorable impact on net sales in 2024
Previous wording
Increase of $15.0 million driven by a reduction of amortization of the inventory fair value step-up recognized in the Merger, which is being amortized over the expected sales cycles of the acquired inventory
Current wording
Increase of $4.9 million driven by a reduction of amortization of the inventory fair value step-up recognized in the merger with SeaSpine Holdings Corporation ("SeaSpine"), consummated on January 5, 2023 (the "Merger"), which is being amortized over the expected sales cycles of the acquired inventory
Previous wording
Increase of $2.1 million driven by a reduction in certain inventory-related charges, primarily due to rationalization decisions made in the prior year related to the Merger
Current wording
Increase of $0.5 million driven by a reduction in certain inventory-related charges, primarily due to portfolio rationalization decisions made in the prior year related to the Merger
Previous wording
Increase of $6.4 million driven by a reduction of amortization of the inventory fair value step-up recognized in the Merger, which is being amortized over the expected sales cycles of the acquired inventory
Current wording
Increase of $19.9 million driven by a reduction of amortization of the inventory fair value step-up recognized in the Merger, which is being amortized over the expected sales cycles of the acquired inventory
Previous wording
Increase of $2.8 million driven by a reduction in certain inventory-related charges, primarily due to rationalization decisions made in the prior year related to the Merger
Current wording
Increase of $3.0 million driven by a reduction in certain inventory-related charges, primarily due to portfolio rationalization decisions made in the prior year related to the Merger
Previous wording
Increase of $2.5 million in variable compensation expenses, including commissions, largely resulting from changes in sales volume and sales mix
Current wording
Increase of $2.7 million in variable compensation expenses, including commissions, largely resulting from changes in sales volume and sales mix
Previous wording
Increase of $1.4 million in depreciation expense related to an increase in deployed instrumentation to support increased sales demand
Current wording
Increase of $2.3 million in depreciation expense related to an increase in deployed instrumentation to support increased sales demand
Previous wording
Partially offset by a decrease of $2.9 million in other compensation expenses, including share-based compensation, primarily due to the realization of synergies following the Merger
Current wording
Partially offset by a decrease of $2.2 million in other compensation expenses, including share-based compensation, primarily due to the realization of synergies following the Merger
Previous wording
Increase of $5.3 million in variable compensation expenses, including commissions, largely resulting from changes in sales volume and sales mix
Current wording
Increase of $8.0 million in variable compensation expenses, including commissions, largely resulting from changes in sales volume and sales mix
Previous wording
Increase of $4.3 million in depreciation expense related to an increase in deployed instrumentation to support increased sales demand
Current wording
Increase of $6.6 million in depreciation expense related to an increase in deployed instrumentation to support increased sales demand
Previous wording
Partially offset by a decrease of $2.6 million in other compensation expenses, including share-based compensation, primarily due to the realization of synergies following the Merger
Current wording
Partially offset by a decrease of $5.7 million in other compensation expenses, including share-based compensation, primarily due to the realization of synergies following the Merger
Previous wording
Decrease of $5.3 million in share-based compensation expense primarily due to accelerated vesting of certain equity-based awards as a result of the Merger recorded in 2023
Current wording
Increase of $1.2 million in share-based compensation expense primarily due to accelerated vesting of certain equity-based awards as a result of the departure of certain executives in 2024
Previous wording
Partially offset by an increase of $7.3 million in succession charges as a result of recent changes in executive leadership positions
Current wording
Increase of $0.6 million in succession charges as a result of recent changes in executive leadership positions
Previous wording
Reduction in general and administrative expenses by the realization of Merger-related synergies, primarily from headcount
Current wording
Partially offset by a reduction in general and administrative expenses by the realization of Merger-related synergies, primarily within professional fees
Previous wording
Decrease in integration-related expenses of $17.2 million compared to prior year comprised professional and advisor fees and severance and retention costs.
Current wording
Decrease in integration-related expenses of $17.4 million compared to prior year, primarily comprised of professional fees, advisor fees, and severance and retention costs
Previous wording
Reduction in general and administrative expenses by the realization of Merger-related synergies, primarily from headcount
Current wording
Reduction in general and administrative expenses by the realization of Merger-related synergies, primarily from headcount and within professional fees
Previous wording
Decrease of $1.7 million in share-based compensation expense primarily due to accelerated vesting of certain equity-based awards as a result of the Merger recorded in 2023
Current wording
Decrease of $4.1 million in share-based compensation expense primarily due to accelerated vesting of certain equity-based awards as a result of the Merger recorded in 2023
Previous wording
Partially offset by an increase of $5.1 million in succession charges as a result of recent changes in executive leadership positions
Current wording
Partially offset by an increase of $7.9 million in succession charges as a result of recent changes in executive leadership positions
Previous wording
Further offset by an increase of $1.1 million driven by an unfavorable change in litigation and investigation related costs
Current wording
Further offset by an increase of $5.9 million driven by an unfavorable change in litigation and investigation-related costs
Previous wording
Decrease of $1.7 million in costs to comply with the European Union Medical Device Regulations
Current wording
Decrease of $1.6 million in costs to comply with the European Union Medical Device Regulations
Previous wording
Decrease of $0.4 million related to merger and integration-related expenses, primarily related to severance and retention costs. In addition, research and development expenses were further reduced by the realization of Merger-related synergies.
Current wording
Decrease of $0.3 million related to merger and integration-related expenses, primarily related to severance and retention costs. In addition, research and development expenses were further reduced by the realization of Merger-related synergies
Previous wording
Decrease of $4.0 million in costs to comply with the European Union Medical Device Regulations
Current wording
Decrease of $5.6 million in costs to comply with the European Union Medical Device Regulations
Previous wording
Decrease of $1.8 million related to merger and integration-related expenses, primarily related to severance and retention costs. In addition, research and development expenses were further reduced by the realization of Merger-related synergies.
Current wording
Decrease of $2.0 million related to merger and integration-related expenses, primarily related to severance and retention costs. In addition, research and development expenses were further reduced by the realization of Merger-related synergies
Previous wording
Increase of $4.4M recognized in 2024 associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger
Current wording
Increase of $2.8 million recognized in 2024 associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger
Previous wording
Partially offset by a decrease of $0.2 million in amortization expense of intangible assets acquired in the Merger
Current wording
Increase of $0.2 million in amortization expense of intangible assets acquired in the Merger
Previous wording
Increase of $5.5M recognized in 2024 associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger
Current wording
Increase of $8.3 million recognized in 2024 associated with the remeasurement of a contingent consideration obligation with Lattus Spine LLC assumed in the Merger
Previous wording
Increase of $3.5 million attributable to an increase in outstanding indebtedness as part of our Financing Agreement in 2024 compared to prior year
Current wording
Increase of $3.3 million attributable to an increase in outstanding indebtedness as part of our Financing Agreement in 2024 compared to prior year
Showing the first 40 of 65 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Increase of $4.9 million driven by an unfavorable change in litigation and investigation-related costs
Current report — wording carried from elsewhere
The increase in tax expense compared to the prior year period is primarily due to increased tax on foreign operations
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Partially offset by an increase in product development and clinical expenses
Previous report — wording carried elsewhere
Partially offset by a decrease of $0.3 million in amortization expense of intangible assets acquired in the Merger