Orthofix Medical Inc.

1. Business and basis of presentation

Description of the Business

Orthofix Medical Inc. (the "Company" or "Orthofix") is a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, the Company delivers exceptional experiences and life-changing solutions to patients around the world. Orthofix offers a comprehensive portfolio of spinal hardware, bone growth therapies, limb reconstruction solutions, biologics and enabling technologies, including the 7D FLASH Navigation System.

Basis of Presentation

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Information on our accounting policies and methods used in the preparation of our consolidated financial statements are included, where applicable, in the respective footnotes that follow.

Changes in Presentation of Consolidated Financial Statements

Certain prior year balances have been reclassified in the consolidated financial statements to conform to current period presentation.

2. Significant accounting policies

The preparation of financial statements in conformity with United States generally accepted accounting principles ("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates these estimates, including those related to contractual allowances, allowances for expected credit losses, inventories, valuation of intangible assets, goodwill, fair value measurements (including fair value measurements associated with business combinations and/or asset acquisitions), litigation and contingent liabilities, income taxes, and share-based compensation. Estimates are based on historical experience, future expectations, and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The following is a discussion of accounting policies and methods used in the consolidated financial statements that are not presented within other footnotes.

Market risk

In the ordinary course of business, the Company is exposed to the impact of changes in interest rates and foreign currency fluctuations. The Company’s objective is to limit the impact of such movements on earnings and cash flows. In order to achieve this objective, the Company seeks to balance its non-U.S. Dollar denominated income and expenditures.

The financial statements for operations outside the U.S. are generally maintained in each subsidiary's respective local currency. All foreign currency denominated balance sheet accounts, except shareholders’ equity, are translated to U.S. Dollars at year end exchange rates, and revenue and expense items are translated at average exchange rates prevailing during the year. Gains and losses resulting from the translation of foreign currency are recorded in the accumulated other comprehensive income (loss) component of shareholders’ equity. Transactional foreign currency gains and losses, including those generated from intercompany operations, are included in other income (expense), net. The Company recorded a gain of $2.9 million, a loss of $4.4 million, and a gain of $1.6 million for the years ended December 31,2025, 2024, and 2023, respectively, related to these transaction foreign currency gains and losses recorded in other income (expense), net.

Financial instruments and concentration of credit risk

Financial instruments that could subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, and accounts receivable. Generally, cash is held at large financial institutions. The Company performs ongoing credit evaluations of customers, generally does not require collateral, and maintains a reserve for expected credit losses. The Company believes that a concentration of credit risk related to accounts receivable is limited because customers are geographically dispersed and end users are diversified.

Cash, cash equivalents, and restricted cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

In November 2023, following the termination of the Second Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as Administrative Agent, and certain lender parties thereto, Bank of America required collateral of approximately $4.7 million of the Company’s cash as a banking service obligation, which was classified as restricted cash as of December 31, 2023. In March 2024, the Company entered into a Security Agreement with Bank of America to reduce the required collateral to $2.5 million.

In April 2025, following the execution of the lease agreement between Armada Drive Carlsbad LLC and the Company, the Company was required to establish a letter of credit of $0.6 million. The Company opened a letter of credit with Hongkong and Shanghai Banking Corporation ("HSBC"), which was classified as restricted cash as of December 31, 2025.

Investing activities that did not result in cash receipts or cash payments during the years ended December 31,2025, 2024, and 2023 consisted of the following, which were not included within cash used in investing activities in the Company’s consolidated statements of cash flows:

Research and development costs, including collaborative arrangements

Expenditures for research and development are expensed as incurred. Expenditures related to the Company’s collaborative arrangement with MTF Biologics ("MTF") are expensed based on the terms of the related agreement. The Company recognized $0.3 million, $0.3 million, and $0.8 million in research and development expense for the years ended December 31,2025, 2024, and 2023, respectively, related to this arrangement.

3. Recently adopted accounting standards and recently issued accounting pronouncements

Recently Adopted Accounting Standards

Adoption of Accounting Standards Update ("ASU") 2022-03 - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

In June 2022, the Financial Accounting Standards Board ("FASB") issued ASU 2022-03, which clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale and to introduce new disclosure requirements. The Company adopted this standard effective January 1, 2024, on a prospective basis. Adoption of this standard did not have a material impact on the Company's consolidated balance sheet, statements of operations, or cash flows, but did modify the Company's disclosures related to certain investments. Refer to Note 12 for the Company's updated disclosures on investments in equity securities subject to capital sale restrictions.

Adoption of ASU 2023-07 - Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, which enhances and improves disclosures about operating segment revenues, measures of profit/loss, and expenses to enable investors to better understand an entity's overall performance and assess potential future cash flows. The amendment requires that an entity disclose (i) significant expenses that are regularly provided to the Chief Operating Decision Maker ("CODM"), (ii) other segment items by reportable segment including a description of its composition, (iii) all annual disclosures required by Topic 280, Reporting Measures of Segment Profit or Loss, in interim periods, (iv) additional measures of a segment's profit or loss used by the CODM in assessing segment performance and allocation of resources, and (v) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. The Company adopted this standard effective January 1, 2024, on a prospective basis. Refer to Note 16 for the Company's business segment disclosures.

Adoption of ASU 2023-09 - Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, which enhances the transparency and usefulness of income tax disclosures required pursuant to Topic 740, Income Taxes, to provide information to better assess how an entity's operations, tax risks and tax planning, and operational opportunities affect its tax rate and future cash flows. The Company adopted this standard effective January 1, 2025, on a modified retrospective basis. Adoption of this standard did not have a material impact on the Company's consolidated balance sheet, statements of operations, or cash flows. Refer to Note 20 for the Company's updated income tax disclosures.

Adoption of ASU 2025-05 - Measurement of Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, which introduced a practical expedient related to applying subtopic 326-20 to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The Company early adopted this standard effective January 1, 2025, on a prospective basis. Adoption of this standard did not have a material impact on the Company's consolidated balance sheet, statements of operations, or cash flows. Refer to Note 15 for the Company's updated accounts receivable disclosures.

Recently Issued Accounting Pronouncements

Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's consolidated financial statements.

4. Mergers, acquisitions, and the discontinuation of the M6 product lines

Merger with SeaSpine

In January 2023, the Company completed an all-stock merger of equals (the "Merger") with SeaSpine Holdings Corporation ("SeaSpine"). The total fair value of consideration transferred as part of the Merger was $376.7 million. Goodwill attributable to the Merger was assigned to the Global Spine reporting segment and is not deductible for tax purposes.

Certain acquired assets and liabilities assumed were valued utilizing Level 3 inputs and assumptions. The purchase price allocation for the Merger is as follows:

Discontinuation of the M6 product lines

In February 2025, the Company announced its plan to discontinue its M6-C artificial cervical disc and M6-L artificial lumbar disc product lines (together, the "M6 artificial discs" or "M6 product lines") in order to allocate associated resources and investment to more profitable growth opportunities. In accordance with FASB Accounting Standards Codification ("ASC") 205, Presentation of Financial Statements, the Company determined that the discontinuation of the M6 artificial disc did not represent a strategic shift that will have a major effect on its consolidated financial results. Therefore, any related financial results were not reported as discontinued operations. Although the M6 product lines did not meet the criteria to be considered a discontinued operation, these assets were determined to meet the criteria to be classified as held for sale as of March 31, 2025, as the Company expected to complete the sale of these assets before December 31, 2025.

During the second quarter of 2025, following several months of marketing and holding the M6 product lines for sale, the Company determined that it is no longer probable that a sale of the M6 product lines will be completed within one year; therefore, the assets no longer qualify to be classified as held for sale. In accordance with this determination, all assets and liabilities associated with the M6 product lines were reclassified from held for sale to held and used during the second quarter of 2025. Further, as a result of this decision, the Company fully impaired all inventories, property, plant, and equipment, and intangible assets related to the M6 product lines that remained in 2025. A summary of impairment charges recognized and the associated financial statement lines in which such costs are recognized are shown in the table below. All such charges are included within the Company's Global Spine reporting segment.

5. Inventories

Inventories are valued at the lower of cost or estimated net realizable value, after provision for excess, obsolete, or impaired items, which is reviewed and updated on a periodic basis by management. For inventory procured or produced internally or through contract manufacturing arrangements at the Company's manufacturing and distribution facilities in the U.S., inventory is valued using a standard-cost method, which is reviewed at least annually, or more often in the event circumstances indicate a change in costs. The Company believes that standard costs, combined with the capitalization and amortization of observed variances versus standards, approximates actual costs on the first-in, first-out method. For inventory procured or produced through contract manufacturing arrangements at the Company's manufacturing facility in Italy, inventory is valued using a weighted-average cost method.

Work-in-process and finished products include material, labor, and production overhead costs. Field and consignment inventory, which represents immediately saleable finished products inventory that is in the possession of the Company’s independent sales representatives or located at third-party customers, such as hospitals, is included within finished products.

The Company adjusts the value of its inventory to the extent management determines that the cost cannot be recovered due to obsolescence or other factors. To make these determinations, management uses estimates of future demand for each product to determine the appropriate inventory reserves and to make corresponding adjustments to the carrying value of these inventories to reflect the lower of cost or estimated net realizable value.

6. Property, plant, and equipment

Property, plant, and equipment is stated at cost or estimated fair value when acquired as part of a business combination, less accumulated depreciation. Costs include all expenditures necessary to place the asset in service, generally including freight and sales and use taxes. Property, plant, and equipment also includes instrumentation, which is generally used to facilitate the implantation of the Company’s products.

The useful lives of these assets are generally as follows:

The Company evaluates the useful lives of these assets on an annual basis. Depreciation is computed on a straight-line basis over the useful lives of the assets. Depreciation of leasehold improvements is computed over the shorter of the lease term or the useful life of the asset. Total depreciation expense was $47.3 million, $41.1 million, and $34.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Expenditures for maintenance, repairs, and minor renewals and improvements, which do not extend the lives of the respective assets, are expensed as incurred. All other expenditures for renewals and improvements are capitalized. The assets and related accumulated depreciation are adjusted for property retirements and disposals, with the resulting gain or loss included in earnings. Fully depreciated assets remain in the accounts until retired from service.

The Company capitalizes system development costs related to internal-use software during the application development stage. Costs related to preliminary project activities and post-implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over the estimated useful life of the software.

Long-lived assets are evaluated for impairment annually or whenever events or changes in circumstances have occurred that would indicate impairment. For purposes of the evaluation, the Company groups its long-lived assets with other assets and liabilities at the lowest level of identifiable cash flows if the asset does not generate cash flows independent of other assets and liabilities. If the carrying value of the asset or asset group exceeds the undiscounted cash flows expected to result from the use and eventual disposition of the asset group, the Company will write the carrying value down to fair value in the period identified.

The Company generally determines fair value of long-lived assets as the present value of estimated future cash flows. In determining the estimated future cash flows associated with the assets, the Company uses estimates and assumptions about future revenue contributions, cost structures, and remaining useful lives of the asset group. The use of alternative assumptions, including estimated cash flows, discount rates, and alternative estimated remaining useful lives could result in different calculations of impairment.

7. Intangible assets

Intangible assets are recorded at cost or at estimated fair value when acquired as a part of a business combination, less accumulated amortization. These assets are amortized on a straight-line basis over the useful lives of the assets, which the Company believes is consistent with the pattern of economic benefit provided by the assets.

Acquired IPR&D represents the fair value assigned to acquired research and development assets that have not reached technological feasibility. In a business combination, the fair value assigned to acquired IPR&D is determined by estimating the remaining costs to develop the acquired technology into commercially viable products, estimating the resulting revenues from the projects, and discounting the net cash flows to present value. The revenue and cost projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing the asset. Additionally, estimated revenues consider the relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by the Company and its competitors. The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the project and uncertainties in the economic estimates used in the projections. Any future costs to further develop the IPR&D subsequent to acquisition are recorded to research and development expense as incurred.

IPR&D assets are considered to be indefinite-lived assets until the completion or abandonment of the associated research and development efforts. During the period the assets are considered indefinite-lived, they are not amortized but tested for impairment. Impairment testing is performed at least annually or when a triggering event occurs that could indicate a potential impairment. If and when development is complete, which generally occurs when regulatory approval to market a product is obtained and becomes available for commercial sale, the associated assets are reclassified to developed technology and are amortized over an assigned useful life that best reflects the economic benefits provided by these assets.

Amortization expense for intangible assets was $30.0 million, $19.0 million, and $18.9 million for the years ended December 31, 2025, 2024, and 2023, respectively. Future amortization expense for intangible assets is estimated as follows:

8. Goodwill

The Company tests goodwill at least annually for impairment. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist. These indicators include, among others, declines in sales, earnings, or cash flows, or the development of a material adverse change in the business climate. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.

The following table presents the net carrying value of goodwill as of December 31, 2025, and 2024, and a rollforward of such balances from December 31, 2024, by reportable unit:

In the third quarter of 2023, the Company announced the termination of its former President and Chief Executive Officer, former Chief Financial Officer, and former Chief Legal Officer, from their respective roles. Immediately following the announcement, the Company’s market capitalization decreased by approximately 30%, indicating that an impairment may exist. As a result, the Company performed an interim quantitative assessment of its goodwill as of September 30, 2023. The Company estimated the fair value of each reporting unit using a weighted average of the fair value derived from both an income approach and a market approach (all Level 3 fair value measurements). Upon performing its assessment, the Company determined its Global Spine reporting unit's fair value exceed its carrying value of net assets as of September 30, 2023.

In the fourth quarter of 2023, the Company performed a qualitative assessment for its annual goodwill impairment analysis, which did not result in an impairment charge. This qualitative analysis considered all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, and relevant entity-specific events.

In the fourth quarters of 2024 and 2025, the Company performed qualitative assessments for its annual goodwill impairment analysis, and concluded it was more likely than not that the fair value of its Global Spine reporting unit exceeded its carrying value in each instance. Upon performing the assessments, the Company determined there wereno indicators of impairment as of each assessment date. These qualitative assessments considered all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, and relevant entity-specific events.

9. Leases

The Company determines if a contractual arrangement qualifies as a lease at inception. The Company’s leases primarily relate to facilities, vehicles, and equipment. Lease assets represent the Company’s right to use an underlying asset for the lease term, while lease liabilities represent the obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term, with lease assets also adjusted for the impact of any lease prepayments and reduced by the value of any lease incentives. As the Company’s leases do not provide an implicit rate, the Company’s incremental borrowing rate is used as a discount rate, based on the information available at the commencement date, in determining the present value of lease payments.

The Company does not recognize lease liabilities or lease assets on the balance sheet for short-term leases (leases with a lease term of twelve months or less as of the commencement date). Rather, any short-term lease payments are recognized as an expense on a straight-line basis over the lease term. The current period short-term lease expense reasonably reflects the Company's short-term lease commitments.

For all classifications of leases, the Company combines lease and non-lease components to account for them as a single lease component. Variable lease payments are excluded from the lease liability and recognized in the period in which the obligation is incurred. Additionally, lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

A summary of the Company’s lease portfolio as of December 31, 2025, and 2024, is presented in the table below:

The components of lease costs were as follows:

Supplemental cash flow information related to leases was as follows:

A summary of the Company’s remaining lease liabilities as of December 31, 2025, is included below:

On January 15, 2026, the Company executed the Sixth Amendment to Lease Agreement (the "Sixth Amendment") amending the lease agreement for its corporate headquarters in Lewisville, Texas. The Sixth Amendment, among other things, extends the lease term of the lease through October 2040.

10. Other current liabilities

11. Indebtedness

The carrying values of the Company’s outstanding debt obligations as of December 31, 2025, and 2024, were as follows:

The Company paid cash related to interest of $17.3 million, $16.9 million, and $5.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Credit Agreement

On November 7, 2024, the Company entered into a $275.0 million secured credit agreement (the "Credit Agreement") with Oxford Finance LLC, as administrative agent and as collateral agent ("Oxford") and certain lenders party thereto, including Oxford, K2 HealthVentures LLC, and HSBC Ventures USA Inc. Certain of our foreign subsidiaries joined the Credit Agreement as guarantors shortly after the signing date. The Credit Agreement provides for a $160.0 million senior secured term loan (the "Initial Term Loan") and a $65.0 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 continued compliance with a pro-forma total debt-to-EBITDA leverage ratio of less than 4.0x. EBITDA, as defined in the Credit Agreement, 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 $50.0 million of draw capacity is available 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. As of December 31, 2025, the Company had only utilized the Initial Term Loan. However, on January 15, 2026, the Company borrowed $65.0 million via the Term B Loan for working capital purposes.

The Credit Facilities are 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.

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.

The 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 $45.0 million of unrestricted cash at the time the Initial Term Loan is funded and thereafter maintain $15.0 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.

In conjunction with obtaining the Credit Agreement, the Company paid $1.7 million in debt issuance costs. These costs have been allocated amongst each of the Initial Term Loan, Term B Loan, and Term C Loan and are being amortized over the term of the Credit Agreement. Capitalized debt issuance costs attributable to the Term B Loan and Term C Loan are included in other long-term assets, net of accumulated amortization, whereas capitalized debt issuance costs associated with the Initial Term Loan are recognized as a direct reduction of the outstanding indebtedness. Debt issuance costs associated with all credit facilities, net of accumulated amortization, were $1.3 million and $1.1 million, as of December 31, 2025, and 2024, respectively. Debt issuance costs amortized or expensed totaled $0.3 million, $4.4 million, and $1.3 million for each of the years ended December 31, 2025, 2024, and 2023, respectively.

As of the effective date of the Credit Agreement, the Company had $125.0 million in principal amount of borrowings outstanding under the Company's prior financing agreement with Blue Torch Finance LLC. In connection with entering into the Credit Agreement, the Company repaid in full all amounts outstanding and terminated all commitments under such prior financing agreement.

Prior Financing Agreement

On November 6, 2023, the Company, as borrower, and certain subsidiaries of the Company as guarantors, entered into a Financing Agreement (the "Financing Agreement") with Blue Torch Finance LLC, as administrative agent and collateral agent (the "Agent"), and certain lenders party thereto. The Financing Agreement provided for a $100.0 million senior secured term loan (the "Blue Torch Initial Term Loan"), a $25.0 million senior secured delayed draw term loan facility (the "Delayed Draw Term Loan") which, subject to certain conditions specified in the Financing Agreement, was available to be drawn on or prior to March 30, 2024, and a $25.0 million senior secured revolving credit facility (the "Revolving Credit Facility," and together with the Blue Torch Initial Term Loan and the Delayed Draw Term Loan, the "Blue Torch Credit Facilities"), each of which were scheduled to mature on November 6, 2027. In connection with entering into the Financing Agreement, the Company repaid in full amounts outstanding and terminated all commitments under the Company’s prior $175.0 million senior secured revolving credit facility evidenced by that certain Second Amended and Restated Credit Agreement, dated as of October 25, 2019, among the Company, certain subsidiaries of the Company as borrowers and guarantors, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto (as amended, supplemented or otherwise modified, the "JPMorgan Credit Agreement"). The Blue Torch Initial Term Loan was fully funded on the effective date of November 6, 2023. As of December 31, 2023, the Company hadnot made any borrowings under the Delayed Draw Term Loan or the Revolving Credit Facility. However, on January 10, 2024, the Company borrowed $15.0 million under the Revolving Credit Facility, which was fully repaid as of the effective date of the Credit Agreement.

Borrowings under the Financing Agreement were used for, among other things, the repayment in full of the former JPMorgan Credit Agreement, working capital and other general corporate purposes of the Company. Borrowings under the Blue Torch Credit Facilities bore interest at a floating rate, which was, at the Company’s option, either the three-month SOFR rate (subject to a floor of 3.00% and a credit spread adjustment of 0.26161%) (the "Adjusted Term SOFR Rate") plus an applicable margin of 7.25%, or a base rate plus an applicable margin of 6.25%. A revolving unused line fee of 2.00% was payable monthly in arrears based on the average amount of the undrawn portion of each lender’s revolving credit commitments under the Revolving Credit Facility for the preceding month. A delayed draw unused fee equal to the Adjusted Term SOFR Rate plus a margin of 1.00% was payable monthly in arrears based on the average amount of the undrawn portion of each lender’s delayed draw term loan commitments in respect of the Delayed Draw Term Loan for the preceding month.

Certain of the Company’s existing and future material subsidiaries (collectively, the "Guarantors") were required to guarantee the repayment of the Company’s obligations under the Financing Agreement. The obligations of the Company and each of the Guarantors with respect to the Financing Agreement were secured by a pledge of substantially all assets of the Company and each of the Guarantors, including, without limitation, accounts receivable, deposit accounts, intellectual property, investment property, inventory, equipment and equity interests in their respective subsidiaries.

Italian Line of Credit

The Company has an unused available Italian line of credit of €5.5 million ($6.5 million and $5.7 million) at December 31, 2025, and 2024, respectively. This unsecured line of credit provides the Company the option to borrow amounts in Italy at interest rates determined at the time of borrowing.

12. Fair value measurements and investments

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Non-financial assets and liabilities of the Company measured at fair value include any long-lived assets that are impaired in a currently reported period or equity securities measured at observable prices in orderly transactions. The authoritative guidance also describes three levels of inputs that may be used to measure fair value:

The Company’s financial instruments include cash equivalents, accounts receivable, accounts payable, long-term secured debt, available for sale debt securities, equity securities, contingent consideration, and deferred compensation plan liabilities. The carrying value of cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term maturities of these instruments. The Company’s secured term loan carries a floating rate of interest; therefore, the carrying value of long-term debt is considered to approximate the fair value.

The Company’s available for sale debt securities, equity securities, contingent consideration, and deferred compensation plan liabilities are, or in some cases, were the only financial instruments recorded at fair value on a recurring basis as follows:

The fair value of the Company’s deferred compensation plan liabilities is determined based on inputs that are readily available in public markets or that can be derived from information available in publicly quoted markets; therefore, the Company has categorized this liability as a Level 2 financial instrument.

Neo Medical Convertible Loan Agreements and Equity Investment

On October 1, 2020, the Company purchased shares of Neo Medical's preferred stock for consideration of $5.0 million and entered into a Convertible Loan Agreement (the "Convertible Loan") pursuant to which Orthofix loaned Neo Medical CHF 4.6 million, or $5.0 million at the date of issuance. In April 2024, the Company converted the Convertible Loan into shares of Neo Medical preferred equity securities. On November 14, 2024, the Company sold and transferred all shares of Neo Medical's preferred equity securities for CHF 6.6 million, or $7.4 million. The Company recorded a realized loss of $5.8 million as a result of the sale, recognized within other expense, net.

The table below presents a reconciliation of the carrying value of the Company’s investment in Neo Medical preferred equity securities for the years ended December 31, 2025, and 2024:

The following table provides a reconciliation of the beginning and ending balances of the Convertible Loan, measured at fair value using significant unobservable inputs (Level 3):

Lattus Contingent Consideration

In connection with the Merger, the Company assumed a contingent consideration obligation under a purchase agreement between SeaSpine and Lattus Spine LLC ("Lattus") executed in December 2022. Under the terms of the agreement, the Company may be required to make installment payments at certain dates based on future net sales of certain products (the "Lateral Products").

The estimated fair value of the Lattus contingent consideration is determined using a Monte Carlo simulation and a discounted cash flow model requiring significant inputs which are not observable in the market. The significant inputs include assumptions related to the estimated future sales of Lateral Products, revenue risk-adjusted discount rates, revenue volatility, and discount rates matched to the timing of payments. The following table provides a reconciliation of the beginning and ending balances for the Lattus contingent consideration measured at estimated fair value using significant unobservable inputs (Level 3):

The following table provides quantitative information related to certain key assumptions utilized within the valuation as of December 31, 2025:

13. Commitments and contingencies

Contingencies policy

The Company records accruals for certain outstanding legal proceedings, investigations, or claims when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company evaluates developments in legal proceedings, investigations, and claims that could affect the amount of any accrual, as well as any developments that would make a loss contingency both probable and reasonably estimable on a quarterly basis. When a loss contingency is not both probable and reasonably estimable, the Company does not accrue the loss. However, if the loss (or an additional loss in excess of the accrual) is at least a reasonable possibility and material, then the Company discloses a reasonable estimate of the possible loss or range of loss, if such reasonable estimate can be made. If the Company cannot make a reasonable estimate of the possible loss, or range of loss, then that is disclosed. In addition, legal fees and other directly related costs are expensed as incurred.

In addition to the matters described in the paragraphs below, in the normal course of its business, the Company is involved in various lawsuits from time to time and may be subject to certain other contingencies. The Company believes any losses related to these matters are individually and collectively immaterial as to a possible loss and range of loss.

Arbitration claims with former executives

In September 2023, the Company's Board of Directors (the “Board“) terminated the employment of Keith Valentine, John Bostjancic, and Patrick Keran, who had served respectively as the Company’s President and Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer (collectively, the “Former Executives”). The Board’s decision followed an investigation conducted by independent outside legal counsel and directed and overseen by a committee of certain of the Company’s independent directors. At the time of termination, the Company notified each of the Former Executives that their respective terminations of employment were being made for “Cause,” as such term is defined in applicable employment-related agreements (including each executive’s respective Change in Control and Severance Agreement, dated June 19, 2023 (the “CIC and Severance Agreements”). The Former Executives subsequently made claims against the Company in arbitration in the State of California, asserting breach of contract because each of them was entitled to the severance payments and other equity-based rights that would be owed to them if their respective termination had been made “without Cause” under the CIC and Severance Agreements, and further asserting damages for purported defamation, false light invasion of privacy, and deceit, as well as indemnification and advancement for attorneys’ fees.

On January 26, 2026, the arbitrator in Mr. Valentine’s matter issued a decision denying Mr. Valentine’s defamation, false light invasion of privacy and deceit claims, and his indemnification of fees claim. Based on the evidence presented during the arbitration process, the arbitrator found that Mr. Valentine’s conduct met the legal definition of “acts of moral turpitude” and that the public statements that the Company made about Mr. Valentine in a press release and filings with the SEC subsequent to the termination of his employment were true. Although Mr. Valentine’s conduct was found to meet the legal definition of “acts of moral turpitude” for purposes of his defamation and other tort claims, and although engaging in “material acts of moral turpitude” would constitute “Cause” under the CIC and Severance Agreement, the arbitrator maintained his preliminary decision issued on October 2, 2025, finding that (i) Mr. Valentine’s conduct prior to his entry into the CIC and Severance Agreement on June 19, 2023 could not be considered for purposes of determining whether “Cause” existed under such agreement, and (ii) his conduct between that date and his termination of employment on September 11, 2023 did not amount to “Cause”. As a result, the arbitrator issued an interim award to Mr. Valentine for breach of contract damages in the amount of $11.8 million, finding such amount to be equivalent to the severance and equity-based rights that Mr. Valentine would have received in a “without Cause” termination. The Company expects the arbitrator’s final order to also include accrued interest, in the approximate amount of $2.7 million.

The Company continues to disagree with the legal claims asserted by the Former Executives in their respective arbitration matters and is vigorously defending them. While the arbitrations for Messrs. Bostjancic and Keran remain pending (and the arbitrators in those proceedings are not bound by the rulings in Mr. Valentine’s arbitration), and certain legal issues related to apportionment of attorneys’ fees remain pending in Mr. Valentine’s matter, the Company is maintaining its accrual in the amount of $18.3 million. The

Company expects a final order from the arbitrator with respect to Mr. Valentine’s matter in the first quarter of 2026. At this time, Messrs. Bostjancic and Keran’s arbitration hearings are currently expected to occur in 2026.

In addition to these arbitration claims, in September 2024 Messrs. Valentine, Bostjancic and Keran filed an action in California State Court against former director and interim CEO Catherine Burzik and current director Wayne Burris, seeking relief for, among other things, alleged defamation, false light invasion of privacy, intentional misrepresentation, false promise, and tortious interference with contract. The Company disagrees with the allegations contained in the action against Ms. Burzik and Mr. Burris and is vigorously defending the asserted claims. The Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from the action.

Securities class action complaints

On August 21, 2024, a securities class action complaint captioned Bernal v. Orthofix Medical Inc., et al., Case No. 24-cv-00690, was filed in the United States District Court for the Eastern District of Texas (the "Bernal Complaint"). The plaintiff, a purported Company shareholder, alleges through the complaint violations of Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 promulgated thereunder, and names as defendants the Company and the following former Company directors and officers: Jon Serbousek (former director and former President and Chief Executive Officer), Keith Valentine (former director and former President and Chief Executive Officer), John Bostjancic (former Chief Financial Officer), and Patrick Keran (former Chief Legal Officer). The complaint alleges that the Company made, and the named former directors and officers caused the Company to make, materially false and misleading statements between October 11, 2022, and September 12, 2023, that, according to the complaint, falsely assured the market regarding Messrs. Valentine, Bostjancic, and Keran's respective commitments to, among other things, ethical and legal standards and corporate responsibility.

On September 6, 2024, a securities class action complaint captioned O'Hara v. Orthofix Medical Inc., et al., Case No. 24-cv-01593, was filed in the United States District Court for the Southern District of California (the "O'Hara Complaint"). The plaintiff, a purported former shareholder of SeaSpine at the time of the Merger, alleges through the complaint violations of Sections 11, 12 and 15 of the Securities Act, and names most of the same defendants as the Bernal Complaint, as well as certain additional current and/or former Company directors and officers. The complaint makes similar assertions to the Bernal complaint, and alleges that the Company's registration statement on Form S-4 filed in 2022 in connection with the Merger, as well as related written and oral offering materials, contained untrue statements of material fact and material omissions, including, among other things, with respect to the effectiveness of the Company's internal controls. On November 26, 2024, the O'Hara Complaint was transferred to the Eastern District of Texas, and on December 11, 2024, the O'Hara Complaint was consolidated with the Bernal Complaint. On April 17, 2025, the plaintiffs filed an amended complaint in the consolidated action, captioned In re Orthofix Medical Inc. Securities Litigation, with substantially the same allegations contained in the Bernal Complaint and the O'Hara Complaint. The consolidated case is captioned In re Orthofix Medical Inc. Securities Litigation, Case No. 24-cv-00690 and is pending in the Eastern District of Texas. The Company and the individual defendants moved to dismiss the amended complaint on May 15, 2025. On February 18, 2026, the Court held a hearing on the motion to dismiss the amended complaint.

On October 28, 2024, a derivative shareholder complaint was filed against certain of the Company's current and former officers and directors alleging derivative liability for the allegations made in the two complaints noted above. On December 18, 2024, a second derivative shareholder complaint was filed with the same allegations made in the first derivative shareholder complaint. On March 21, 2025, the two derivative shareholder complaints were consolidated into one case.

The Company disagrees with the legal claims asserted in these complaints and is vigorously defending them. Due in part to the preliminary nature of these three matters, the Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from the respective complaints.

Commitments

As a result of the Merger, the Company became party to agreements with certain distributor partners that provide the Company with an option to purchase, and an option for those partners to require the Company to purchase, the distribution business of those partners at specified future dates. At such time, the Company or distributor may (in certain cases, subject to satisfying certain conditions) submit written notice to the other of its intention to exercise its rights and initiate or require the purchase. Upon receipt of the written notice, the Company and the distributor will work in good faith to consummate the purchase, provided that the distributor meets the required conditions of such purchase option. Under certain of these agreements, the purchase price would be paid in shares of the Company's common stock, whereas for others, the purchase price can be paid in cash or shares, at the Company's option. Based on the closing price of the Company's common stock as of December 31, 2025, assuming the options under all the relevant agreements were exercised, the estimated total number of shares the Company would issue under these agreements was approximately 0.3 million shares for agreements that must be settled in shares of the Company's stock. The Company has received notification from one such distributor, who has notified the Company of its decision to exercise its buyout option. The Company is currently in negotiations with this distributor with respect to the conditions of a potential acquisition, the consummation of which may be deferred to a future date.

Italian Medical Device Payback ("IMDP")

In 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System. A key provision of the law is a ‘payback’ measure, requiring medical device companies in Italy to make payments to the Italian government if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps.

In the third quarter of 2022, the Italian Ministry of Health provided guidelines to the Italian regions and provinces on seeking payback of expenditure overruns relating to the 2015 through 2018 calendar years. Since receiving the guidelines, several regions and provinces have requested payment from affected medical device companies, including the Company. The Company has taken legal action to dispute the legality of such measures. In July 2024, the Italian Constitutional Court issued two judgments following public hearings on the matter held in May 2024. These judgments (i) declared the payback system itself as constitutionally legitimate and (ii) extended previously communicated reductions in the payback liability for certain fiscal years to all medical device companies, regardless of whether or not they had waived their legal claims on the matter.

The Company accounts for the estimated cost of the IMDP as sales, general, and administrative expense and periodically reassesses the liability based upon current facts and circumstances. As a result, the Company recorded expenses of $1.4 million, $1.4 million, and $1.3 million for the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, the Company has accrued $10.6 million related to the IMDP, which it has classified within other long-term liabilities; however, the actual liability could be higher or lower than the amount accrued once all legal proceedings are resolved and upon further clarification of the IMDP by the Italian authorities for more recent fiscal years.

14. Shareholders’ equity

Dividends

The Company has not historically paid dividends to holders of its common stock. Certain subsidiaries of the Company have restrictions on their ability to pay dividends in certain circumstances pursuant to the Credit Agreement. In the event that the Company decides to pay a dividend to holders of its common stock in the future with dividends received from its subsidiaries, the Company may, based on prevailing rates of taxation, be required to pay additional withholding and income tax on such amounts received from its subsidiaries.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) is comprised of foreign currency translation adjustments and unrealized gains (losses) on available for sale debt securities. The Company’s policy is to release income tax effects related to items recognized within accumulated other comprehensive income (loss) using a portfolio approach. The components of and changes in accumulated other comprehensive income (loss) are as follows:

15. Revenue recognition and accounts receivable

Revenue Recognition

The Company accounts for a contract when there is (i) approval and commitment from both parties, (ii) the rights of the parties are identified, (iii) payment terms are identified, (iv) the contract has commercial substance, and (v) collectability of consideration is probable. The Company’s contracts may contain one or more performance obligations. If a contract contains more than one performance obligation, the Company allocates the total transaction price to each of the performance obligations based upon the observable standalone selling price of the promised goods or services underlying each performance obligation. The Company recognizes revenue when control of the promised goods or services is transferred to the customer, which typically occurs at a point in time upon shipment, delivery, or utilization, in an amount that reflects the consideration which the Company expects to be entitled to in exchange for the promised goods or services. The consideration for goods or services reflects any fixed amount stated per the contract and estimates for any variable consideration, such as discounts, to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

The following sections discuss the Company’s revenue recognition policies by significant product category:

Bone Growth Therapies

Bone Growth Therapies revenue is largely attributable to the U.S. and is comprised of third-party payor transactions and wholesale revenue.

The largest portion of Bone Growth Therapies revenue is derived from third-party payors. This includes commercial insurance carriers, health maintenance organizations, preferred provider organizations, and governmental payors, such as Medicare. Revenue is recognized when the product is fitted to and accepted by the patient and all applicable documents required by the third-party payor have been obtained. Amounts paid by third-party payors are generally based on fixed or allowable reimbursement rates. These revenues are recorded at the expected or preauthorized reimbursement rates, net of any contractual allowances or adjustments. Certain billings are subject to review by the third-party payors and may be subject to adjustment.

Wholesale revenue is related to the sale of the Company’s bone growth stimulators directly to durable medical equipment suppliers. Wholesale revenues are typically recognized upon shipment and receipt of a confirming purchase order, which is when the customer obtains control of the promised goods.

Biologics revenue is largely attributable to the U.S. and is mostly processed from within the Company’s Irvine facility. In addition, the Company has a long-standing collaborative arrangement with MTF that provides exclusive global marketing rights to MTF's Virtuos and Trinity Elite, and exclusive rights to market the FiberFuse tissues in the U.S. Per the terms of the agreement, MTF sources the tissue, processes it to create the allografts, packages, and delivers the tissue to the customer. The Company receives marketing fees from MTF based on sales of products covered under the collaborative arrangement. MTF is considered the principal in these arrangements; therefore, the Company recognizes marketing service fees on a net basis within net sales upon shipment of the product to the customer and receipt of a confirming purchase order.

Spinal Implants and Global Limb Reconstruction (formerly "Global Orthopedics")

Spinal Implants and Global Limb Reconstruction products are distributed world-wide, with U.S. sales largely comprised of commercial revenue and international sales derived from both commercial revenue and stocking distributor arrangements.

Commercial revenue is largely related to the sale of the Company’s Spinal Implants and Global Limb Reconstruction products to hospital customers. The customer obtains control and revenues are recognized when these products have been utilized and a confirming purchase order has been received from the hospital.

Other revenues within the Spinal Implants and Global Limb Reconstruction product categories are derived from stocking distributors, who purchase the Company’s products and then re-sell them directly to customers, such as hospitals. For stocking distributor arrangements, it is the Company’s policy to recognize revenue upon shipment and receipt of a confirming purchase order, which is when the distributor obtains control of the promised goods. The transaction price for revenue recognition is estimated based upon the Company’s historical collection experience with the stocking distributor.

Enabling technologies revenue is primarily comprised of sales of the 7D Flash Navigation Systems and related instruments to hospitals, healthcare providers, and stocking distributors. Revenue is typically recognized from these sales upon installation of the system at the site of the purchasing hospital or upon shipment to a stocking distributor and receipt of a confirming purchase order, as this represents the point in time when the performance obligation has been satisfied.

Product Sales and Marketing Service Fees

The table below presents net sales, which includes product sales and marketing service fees, for each of the years ended December 31, 2025, 2024, and 2023.

Marketing service fees are received from MTF based on total sales of biologics tissues and relate solely to the Biologics product category within the Global Spine reporting segment, whereas product sales primarily consist of the sale of Bone Growth Therapies, Spinal Implants, non-MTF sourced Biologics, Enabling Technologies, and Global Limb Reconstruction products. Marketing service fees received from MTF were $46.9 million, or approximately 30% of total Biologics revenues, for the year ended December 31, 2025. As MTF is the single supplier for certain allografts in the Company’s Biologics portfolio, derived from deceased donors for their bone grafts and living donors for their amnion grafts, any event or circumstance that would impact MTF’s continued access to donors or the Company’s ability to market these tissues may adversely impact the Company’s financial results.

Revenues exclude any value added or other local taxes, intercompany sales, and trade discounts. Shipping and handling costs for products shipped to customers are included in cost of sales, and were $8.9 million, $9.9 million, and $9.5 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Accounts receivable and related allowances

Payment terms vary by the type and location of the Company’s customers and the products or services offered. The term between invoicing and when payment is due is generally not significant.

The Company’s allowance for expected credit losses represents the portion of the receivable’s amortized cost basis that an entity does not expect to collect over the receivable’s contractual life, considering past events, current conditions, and reasonable and supportable forecasts of future economic conditions.

The process for estimating the ultimate collection of accounts receivable involves certain assumptions and judgments. The determination of the contractual life of accounts receivable, the aging of outstanding receivables, as well as the historical collections, write-offs, and payor reimbursement experience over the estimated contractual lives of such receivables, are integral parts of the estimation process related to reserves for expected credit losses and the establishment of contractual allowances. The Company elected the practical expedient provided within ASU 2025-05, which allows the Company to assume that current macroeconomic conditions as of the balance sheet date persist for the remaining contractual life of current accounts receivable.

Accounts receivable are analyzed on a quarterly basis to assess the adequacy of both reserves for expected credit losses and contractual allowances. Revisions in allowances for expected credit loss estimates are recorded as an adjustment to the Company's provision for expected credit losses within sales, general, and administrative expenses. Revisions to contractual allowances are recorded as an adjustment to net sales. These estimates are periodically tested against actual collection or adjustment experience. In addition, the Company analyzes its receivables by geography and by customer type, where appropriate, in developing estimates for expected credit losses.

The following table provides the detail of changes in the Company’s allowance for expected credit losses for the years ended December 31, 2025, and 2024:

The Company will generally sell receivables from certain Italian public hospitals each year to accelerate cash collections. During 2025, 2024, and 2023, the Company sold €8.9 million, €7.9 million, and €9.2 million ($10.3 million, $8.5 million, and $10.0 million) of receivables, respectively. The related fees for 2025, 2024, and 2023, were $0.2 million, $0.3 million, and $0.4 million, respectively, which were recorded as interest expense. Accounts receivable sold without recourse are removed from the balance sheet at the time of sale.

16. Business segment information

The Company's operations are managed throughtwo reporting segments: Global Spine and Global Limb Reconstruction. These reporting segments represent the operating segments for which the President and Chief Executive Officer, who is also the Chief Operating Decision Maker ("CODM"), reviews financial information and makes resource allocation decisions among businesses. The primary metric used by the CODM in managing the Company is adjusted earnings before interest, tax, depreciation, and amortization ("adjusted EBITDA", a non-GAAP financial measure). Adjusted EBITDA represents earnings before interest income (expense), income taxes, depreciation and amortization, and excludes the impact of share-based compensation, gains and losses related to changes in foreign exchange rates, charges related to the SeaSpine Merger and other strategic investments, restructuring costs and impairments related to the discontinuation of the M6 product lines, acquisition-related fair value adjustments, gains and/or losses on investments, litigation and investigation charges, succession charges, charges related to initial compliance with regulations set forth by the European Union Medical Device Regulation, and refunds associated with the employee retention credit established by the Coronavirus Aid, Relief, and Economic Security Act.

Corporate activities are comprised of operating expenses not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.

The Global Spine reporting segment offers two primary product categories: (i) Bone Growth Therapies and (ii) Spinal Implants, Biologics, and Enabling Technologies.

The Bone Growth Therapies product category manufactures, distributes, sells, and provides support services for market-leading devices used adjunctively in high-risk spinal fusion procedures and to treat both nonunion and acute fractures in the orthopedic space. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spinal, appendicular fractures, treating both fresh or nonunion fractures. These products are sold almost exclusively in the U.S., using distributors and direct sales representatives to provide these devices to healthcare providers and their patients.

Spinal Implants, Biologics, and Enabling Technologies comprises (i) a broad portfolio of spine fixation implant products used in surgical procedures of the spine, (ii) one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments, and (iii) 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.

The Global Limb Reconstruction reporting segment offers products and solutions for the underserved limb reconstruction market that encompasses four pillars: deformity correction, limb lengthening, complex fracture management, and limb preservation. This reporting segment specializes in the design, development, and marketing of external and internal fixation limb reconstruction products that are coupled with enabling digital technologies to serve the complete patient treatment pathway. The Company sells these products worldwide through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers.

The table below presents net sales by major product category by reporting segment:

The following table presents adjusted EBITDA, the primary metric used in managing the Company, by reporting segment:

The following table presents depreciation, amortization, and related impairments by reporting segment:

Geographical information

The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:

The following data includes net sales by geographic destination:

The following data includes property, plant, and equipment, net by geographic area:

17. Acquisition-related amortization, impairment, and remeasurement

Acquisition-related amortization, impairment, and remeasurement consists of (i) the remeasurement of any related contingent consideration arrangement, (ii) amortization related to intangible assets acquired through business combinations or asset acquisitions, and (iii) recognized costs associated with acquired IPR&D assets, which are recognized immediately upon acquisition.

Components of acquisition-related amortization, impairment, and remeasurement for the years ended December 31, 2025, 2024, and 2023, respectively, are as follows:

Lattus Contingent Consideration

Under the terms of a contingent consideration obligation in a purchase agreement assumed in the Merger, the Company may be required to make installment payments at certain dates based on future net sales of the Lateral Products. The Company made a payment of $6.3 million under this arrangement during the year ended December 31, 2025. The estimated fair value of the remaining contingent consideration arrangement as of December 31, 2025, was $7.9 million; however, the actual amount ultimately paid could be higher or lower than the estimated fair value of the contingent consideration. As of December 31, 2025, approximately $4.3 million of the remaining contingent consideration liability was classified within other current liabilities and $3.6 million was classified within other long-term liabilities. See Note 12 for further discussion of this arrangement.

IGEA S.p.A Asset Acquisition

In 2021, the Company entered into an Exclusive License and Distribution Agreement (the "License Agreement") with IGEA S.p.A ("IGEA"), an Italian manufacturer and distributor of bone and cartilage stimulation systems. As consideration for the License Agreement, the Company agreed to pay up to $4.0 million, with certain payments contingent upon reaching an FDA milestone. Of this amount, $0.5 million was paid in 2021, which was recognized as acquired IPR&D costs within acquisition-related amortization, impairment, and remeasurement. The Company accounted for this transaction as an asset acquisition. As the transaction was classified as an asset acquisition, the value of the consideration associated with the contingent milestones were recognized at the time that applicable contingencies were resolved and consideration was paid or became payable. The License Agreement also includes certain minimum purchase requirements.

In 2022, the Company achieved FDA approval pertaining to the acquired technology, triggering a contingent consideration milestone obligation of $3.5 million. Of this amount, $1.5 million was paid in 2022, $1.0 million was paid in 2023, and $1.0 million was paid in 2024.

18. Share-based compensation

At December 31, 2025, and 2024, the Company had stock option, award, and stock purchase plans.

Merger with SeaSpine

Pursuant to the Merger Agreement, the equity awards of SeaSpine (including stock options and restricted stock units) outstanding as of immediately prior to the closing of the Merger were converted into equity awards denominated in shares of Orthofix common stock. The Company issued options to purchase 1.9 million shares of Orthofix common stock and 0.5 million shares of time-based vesting restricted stock in connection with the conversion of such awards. The estimated fair value of the portion of the SeaSpine equity awards for which the required service period had been completed at the time of the closing of the Merger was treated as purchase consideration. The remaining estimated fair value is recorded as compensation expense over the remainder of the service period associated with the awards.

In addition, as part of the Merger, the Board determined to treat the transaction as a "Change in Control" under applicable agreements and equity plans. Thus, in January 2023, all outstanding and previously granted performance-based and market-based restricted stock units became time-based restricted stock units with the performance goals deemed achieved at the target level of 100%.

2012 Long Term Incentive Plan

The Board adopted the Amended and Restated 2012 Long-Term Incentive Plan (the "2012 LTIP") on April 23, 2018, which was subsequently approved by shareholder ratification. The 2012 LTIP provides for the grant of options to purchase shares of the Company’s common stock, stock awards (including restricted stock, unrestricted stock, and stock units), stock appreciation rights, performance-based awards, and other equity-based awards. All of the Company’s employees and the employees of the Company’s subsidiaries and affiliates are eligible and may receive awards under the 2012 LTIP. In addition, the Company’s non-employee directors, consultants, and advisors who perform services for the Company and its subsidiaries and affiliates may receive awards under the 2012 LTIP. Awards granted under the 2012 LTIP expire no later thanten years after the date of grant. At December 31, 2025, the Company reserves a total of 16.3 million shares of common stock for issuance pursuant to the 2012 LTIP, subject to certain adjustments set forth in the 2012 LTIP. At December 31, 2025, there were 2.4 million options outstanding under the 2012 LTIP, of which 1.4 million were exercisable. In addition, there were 2.2 million restricted stock units outstanding, some of which contain performance-based vesting conditions, under the 2012 LTIP as of December 31, 2025.

SeaSpine 2015 Plan

Pursuant to the Merger Agreement, the Company assumed awards outstanding under the SeaSpine Holdings Corporation Amended and Restated 2015 Incentive Award Plan Award Plan (the "SeaSpine 2015 Plan"). The SeaSpine 2015 Plan provides for the grant of options to purchase shares of the Company’s common stock, stock awards (including restricted stock, unrestricted stock, and stock units), stock appreciation rights, performance-based awards and other equity-based awards. All of the Company’s employees and the employees of the Company’s subsidiaries and affiliates are eligible and may receive awards under the SeaSpine 2015 Plan. In addition, the Company’s non-employee directors, consultants, and advisors who perform services for the Company and its subsidiaries and affiliates may receive awards under the SeaSpine 2015 Plan. At December 31, 2025, the Company reserves a total of 3.0 million shares of common stock for issuance pursuant to the SeaSpine 2015 Plan, subject to certain adjustments set forth in the SeaSpine 2015 Plan. At December 31, 2025, there were 0.7 million options outstanding under the SeaSpine 2015 Plan, of which 0.4 million were exercisable. In addition, there were 0.5 million restricted stock units outstanding, some of which contain performance-based vesting conditions, under the SeaSpine 2015 Plan as of December 31, 2025.

Inducement Plans

As an inducement to accept employment, the Company has periodically granted inducement awards to new employees and has also assumed inducement awards that were granted by SeaSpine prior to the Merger. During 2025, there wereno inducement awards granted. Under all inducement plans, as of December 31, 2025, there were 1.5 million options outstanding, of which 0.6 million were exercisable, and 1.0 million unvested restricted stock units outstanding, some of which contain performance-based vesting conditions.

Stock Purchase Plan

The Second Amended and Restated Stock Purchase Plan, as Amended (the "Stock Purchase Plan") provides for the issuance of shares of the Company’s common stock to eligible employees and directors of the Company and its subsidiaries that elect to participate in the plan and acquire shares of common stock through payroll deductions (including executive officers).

During each purchase period, eligible employees may designate between 1% and 25% of their compensation to be deducted for the purchase of common stock under the plan (or such other percentage in order to comply with regulations applicable to employees domiciled in or resident of a member state of the European Union). For eligible directors, the designated percentage will be applied to an amount equal to his or her director compensation paid in cash for the current plan period. The purchase price of the shares under the plan is equal to 85% of the fair market value on the first day of the plan period or, if lower, on the last day of the plan period.

Due to the compensatory nature of such plan, the Company records the related share-based compensation expense in the consolidated statement of operations. Compensation expense is estimated using the Black-Scholes valuation model, with such value recognized as expense over the plan period. As of December 31, 2025, the aggregate number of shares reserved for issuance under the Stock Purchase Plan is 4.9 million. As of December 31, 2025, a total of 3.8 million shares had been issued pursuant to the Stock Purchase Plan.

Share-Based Compensation Expense

Share-based compensation expense is recorded in the same line of the consolidated statements of operations as the employee’s cash compensation. The following tables present the detail of share-based compensation expense by line item in the consolidated statements of income as well as by award type, for the years ended December 31, 2025, 2024, and 2023:

The income tax benefit related to this expense was $5.5 million, $5.8 million, and $5.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Stock Options

The fair value of time-based stock options is determined using the Black-Scholes valuation model, with such value recognized as expense over the service period, which is typically three to four years, net of actual forfeitures. A summary of the Company’s assumptions used in determining the fair value of the stock options granted during each of the years ended December 31, 2025, 2024, and 2023, is shown in the following table.

The expected term of the options granted is estimated based on a number of factors, including the vesting and expiration terms of the award, historical employee exercise behavior for both options that are currently outstanding and options that have been exercised or are expired, and an employee’s average length of service. Expected volatility is based on the historical volatility of the Company’s common stock. The risk-free interest rate is determined based upon a constant U.S. Treasury security rate with a contractual life that approximates the expected term of the option.

Certain of the Company's outstanding stock options contain market-based vesting conditions. The fair value of market-based stock options is determined at the date of the grant using the Monte Carlo valuation methodology. The Monte Carlo methodology incorporates into the valuation the possibility that the market condition may not be satisfied. Such value is recognized over thethree-year service period, net of actual forfeitures.

A summary of the status of the Company’s time-based stock option plans as of December 31, 2025, and 2024, and changes during the year ended December 31, 2025, is presented below:

A summary of the status of the Company’s market-based stock option plans as of December 31, 2025, and 2024, and changes during the year ended December 31, 2025, is presented below:

As of December 31, 2025, the unamortized compensation expense relating to options granted and expected to be recognized was $5.3 million. This amount is expected to be recognized through March 2029 over a weighted average period of approximately 1.0 years. The total intrinsic value of options exercised for each of the years ended December 31, 2025, 2024, and 2023 was less than $0.1 million, respectively. For the year ended December 31, 2025, the Company received $0.4 million cash from stock option exercises, and realized less than $0.1 million in tax benefit for the tax deductions from stock option exercises. The aggregate intrinsic value of options outstanding and options exercisable as of December 31, 2025, is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock for options that had exercise prices lower than $15.16, the closing price of the Company’s stock on December 31, 2025. The aggregate intrinsic value of options outstanding was $3.0 million as of December 31, 2025. The aggregate intrinsic value of options exercisable was $0.9 million as of that date.

Time-based Restricted Stock Awards and Stock Units

Compensation expense for time-based restricted stock awards and stock units, which represents the fair value of the stock measured at the market price at the date of grant, is recognized on a straight-line basis over the vesting period, which is typically three tofour years, net of actual forfeitures.

The aggregate fair value of time-based restricted stock awards and stock units that vested during the years ended December 31, 2025, 2024, and 2023, was $12.4 million, $13.3 million, and $17.2 million, respectively. Unamortized compensation expense related to time-based restricted stock awards and stock units amounted to $15.3 million at December 31, 2025. This amount is expected to be recognized through December 2028 over a weighted average period of approximately 1.5 years. The aggregate intrinsic value of time-based restricted stock awards and stock units outstanding was $30.1 million as of December 31, 2025.

Performance-based and Market-based Restricted Stock Units

Certain of the Company's outstanding restricted stock units contain performance-based vested conditions or market-based vesting conditions. As previously discussed, in January 2023 all then outstanding performance-based and market-based restricted stock units became time-based restricted stock units with the performance goals deemed achieved at the target level of 100% upon completion of the Merger based on the Board of Directors' determination to treat the transaction as a "Change in Control" under applicable agreements and equity plans.

The fair value of performance-based restricted stock units is calculated based upon the closing stock price at the date of grant. Such value is recognized as expense over the requisite service period beginning in the period in which they are deemed probable to vest, net of actual forfeitures. Vesting probability is assessed based upon forecasted financial metrics or applicable milestones associated with the applicable grant.

The fair value of market-based restricted stock units is determined at the date of the grant using the Monte Carlo valuation methodology, with any discounts for post-vesting restrictions estimated using the Chaffe Model. The Monte Carlo methodology incorporates into the valuation the possibility that the market condition may not be satisfied. Such value is recognized on a straight-line basis over the vesting period, net of actual forfeitures.

The fair value of performance-based and/or market-based restricted stock units that vested and settled during each of the years ended December 31, 2025, 2024, and 2023, totaled less than $0.1 million, respectively. Unamortized compensation expense for performance-based and/or market-based restricted stock units totaled $16.3 million at December 31, 2025, and is expected to be recognized over a weighted average period of approximately 1.5 years. The aggregate intrinsic value of performance-based restricted stock units outstanding was $25.0 million as of December 31, 2025.

A summary of the status of our time-based and performance-based and/or market-based restricted stock units as of December 31,2025, and 2024, and changes during the year ended December 31, 2025, is presented below:

19. Defined contribution plans and deferred compensation

Defined Contribution Plans

Orthofix sponsors a defined contribution plan (the "401(k) Plan") covering substantially all full-time U.S. employees. The 401(k) Plan allows participants to contribute up to 90% of their pre-tax compensation, subject to certain limitations, with the Company matching 100% of the first 4% of the employee's base compensation. During the years ended December 31,2025, 2024, and 2023, the Company incurred expenses relating to the 401(k) Plan, including matching contributions, of approximately $6.8 million, $5.9 million, and $4.6 million, respectively.

The Company also operates defined contribution plans for its international employees meeting minimum service requirements. The Company’s expenses for such contributions during each of the years ended December 31, 2025, 2024, and 2023, were $2.0 million, $1.2 million, and $1.1 million, respectively.

Deferred Compensation Plans

Under Italian Law, our Italian subsidiary accrues deferred compensation on behalf of its employees, which is paid on termination of employment. The accrual for deferred compensation is based on a percentage of the employee’s current annual remuneration plus an annual charge. Deferred compensation is also accrued for the leaving indemnity payable to agents in case of dismissal, which is regulated by a national contract and is equal to approximately 4% of total commissions earned from the Company. The Company’s relations with its Italian employees, who represent 15% of total employees at December 31,2025, are governed by the provisions of a National Collective Labor Agreement setting forth mandatory minimum standards for labor relations in the metal mechanic workers industry. The Company is not a party to any other collective bargaining agreement. The liability is recorded within other long-term liabilities as of December 31, 2025, and 2024, and totaled $1.7 million and $1.7 million, respectively. This represents the amount that would be payable if all the employees and agents had terminated employment at that date.

20. Income taxes

Income (loss) before provision for income taxes consisted of the following:

The provision for income taxes consists of the following:

The differences between the income tax provision at the U.S. federal statutory tax rate and the Company’s effective tax rate for the years ended December 31,2025, 2024, and 2023, consist of the following:

State taxes in California and Texas made up the majority (greater than 50%) of the tax effect in this category in 2025 and 2024. State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category in 2023.

The Company’s deferred tax assets and liabilities are as follows:

The Company historically presented deferred income tax assets as a separate and discrete line item on its consolidated balance sheet; however, as the significance of the asset has decreased as a result of the recognition of valuation allowances, the Company has reclassified this balance to be included within other long-term assets. Deferred income tax liabilities are included in Other Long Term Liabilities.

The Company accounts for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and income tax basis of assets and liabilities, and for operating losses and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the years in which those items are expected to be realized. Tax law and rate changes are recorded in the period such changes are enacted. The Company establishes a valuation allowance when it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future. We recognize the tax impact of including certain foreign earnings in US taxable income as a period cost.

The valuation allowance is primarily attributable to net operating loss carryforwards and temporary differences in domestic and certain foreign jurisdictions. The net increase in the valuation allowance of $19.0 million during the year principally relates to recognizing a full valuation allowance against the net deferred tax asset within the Company’s U.S. and Italy operations. The Company considered many factors when assessing the likelihood of future realization of these deferred tax assets, including recent cumulative losses experienced by the subsidiary, expectations of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other relevant factors. That increase was partially offset by a decrease of valuation allowances on net operating loss carryforwards in other foreign jurisdictions due to expiration, statutory rate changes, and changes regardingthe realizability of net deferred tax assets. It is reasonably possible that the valuation allowance will increase in 2026 due to further losses in certain jurisdictions, offset by decreases related to the expiration of foreign net operating losses.

The Company has federal net operating loss carryforwards of $428.0 million and federal research and development credits of $5.8 million. These federal carryforwards are subject to limitation under the provisions of Internal Revenue Code Section 382 and will continue to expire in 2026. The Company has state net operating loss carryforwards of approximately $292.3 million, principally related to California, Illinois, and Michigan. These carryforwards are subject to limitation under various provisions implemented by each specific state jurisdiction. Additionally, the Company has net operating loss carryforwards in various foreign jurisdictions of approximately $141.3 million, which mainly relate to the Company’s Netherlands, Brazil, Italy, and Canada operations. The majority of the foreign net operating losses do not expire. The Company also has research and development credits in Canada of $1.6 million which begin to expire in 2041.

The Company’s investment in foreign subsidiaries continues to be indefinite in nature; however, the Company may periodically repatriate a portion of these earnings to the extent that it does not incur significant additional tax liability. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings of foreign subsidiaries is not practicable.

The Company records a benefit for uncertain tax positions when the weight of available evidence indicates that it is more likely than not, based on an evaluation of the technical merits, that the tax position will be sustained on audit. The tax benefit is measured as the largest amount that is more than 50% likely to be realized upon settlement. The Company re-evaluates income tax positions periodically to consider changes in facts or circumstances such as changes in or interpretations of tax law, effectively settled issues under audit, and new audit activity. The Company includes interest and any applicable penalties related to income tax issues as part of income tax expense in its consolidated financial statements.

The Company’s unrecognized tax benefit was $1.7 million for both of the years ended December 31, 2025, and 2024, respectively. The Company recorded net interest and penalties expense (benefit) on unrecognized tax benefits of ($0.1) million, $0.2 million, and $0.2 million for the years ended December 31, 2025, 2024, and 2023, respectively, and had approximately $1.0 million and $1.0 million accrued for payment of interest and penalties as of December 31, 2025, and 2024, respectively. The entire amount of unrecognized tax benefits, including interest, would favorably impact the Company's effective tax rate if recognized.

A reconciliation of the gross unrecognized tax benefits (excluding interest and penalties) for the years ended December 31,2025, and 2024, is shown below:

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in certain state and foreign jurisdictions, including Italy, as well as other jurisdictions where the Company maintains operations. The statute of limitations with respect to federal and state tax filings is closed for years prior to 2022. The statute of limitations with respect to the major foreign tax filing jurisdictions is closed for years prior to 2021. The Company cannot reasonably determine if any state and local or foreign examinations will have a material impact on its financial statements and cannot predict the timing regarding the resolution of these tax examinations.

The Company paid (received or was refunded) cash relating to income taxes totaling $1.6 million, $1.3 million, and $0.9 million for the years ended December 31, 2025, 2024, and 2023, respectively as follows:

• The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes a broad range of tax reform provisions affecting businesses. The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. Additionally, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred. In addition, the OBBBA returns the interest limitation rules under Internal Revenue Code (IRC) Section 163(j) to a tax basis EBITDA calculation as opposed to earnings before interest and taxes (EBIT). The Company has reflected the impact of these provisions in the 2025 income tax provision.

21. Earnings per share (EPS)

The Company uses the treasury stock method of computing basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during each of the respective years. Diluted EPS is computed using the weighted average number of common and common equivalent shares outstanding during each of the respective years using the treasury stock method. The difference between basic and diluted shares, if any, largely results from common equivalent shares, which represents the dilutive effect of the assumed exercise of certain outstanding share options, the assumed vesting of restricted stock granted to employees and directors, or the satisfaction of certain necessary conditions for contingently issuable shares (see Note 18).

For each of the three years ended December 31, 2025, 2024, and 2023, no adjustments were made to net income for purposes of calculating basic and diluted EPS. The following is a reconciliation of the weighted average shares used in the diluted EPS computations:

There were 8.7 million,7.2 million, and 6.5 million weighted average outstanding options, time-based restricted stock awards and stock units, performance-based stock units, and market-based stock units not included in the diluted earnings per share computation for the years ended December 31,2025, 2024, and 2023, respectively, because inclusion of these awards was anti-dilutive or, for performance-based stock units and market-based stock units, all necessary conditions had not been satisfied by the end of the respective period.

22. Subsequent events

Renewal of Corporate Headquarters Lease

On January 15, 2026, the Company executed the Sixth Amendment amending the lease agreement for its corporate headquarters in Lewisville, Texas. The Sixth Amendment, among other things, extends the lease term of the lease through October 2040. Refer to Note 9 for additional discussion and information on the Company’s lease obligations.

Subsequent Borrowings under the Credit Agreement

Additionally on January 15, 2026, the Company borrowed $65.0 million via the Term B Loan of its Credit Agreement with Oxford for working capital purposes. Refer to Note 11 for additional discussion regarding the Company’s Credit Agreement and information on the Company’s outstanding indebtedness.

Arbitration claims with former executives

On January 26, 2026, the arbitrator overseeing the claim from former CEO Keith Valentine issued a decision denying Mr. Valentine’s claims of defamation, false light invasion of privacy and deceit, and his indemnification of fees claim, and issued an interim award to Mr. Valentine. Refer to Note 13 for additional information regarding the arbitration claims with the Company’s former executives.