WARSAW, Ind., Nov. 07, 2019 (GLOBE NEWSWIRE) — OrthoPediatrics Corp. (“OrthoPediatrics”) (NASDAQ:KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, announced today its financial results for the third quarter ended September 30, 2019.
Third Quarter & Recent Highlights
- Increased total revenue to $20.7 million for third quarter 2019, up 31.1% from $15.8 million in third quarter 2018
- Generated positive Adjusted EBITDA of $703 thousand for third quarter 2019, up from negative $127 thousand in third quarter 2018
- Increased the domestic sales organization to 158 consultants up 21.5% from third quarter 2018
- Deployed $13.7 million of consignment sets year-to-date, up 29.0% compared to $10.6 million in the same period prior year
- Launched two new Cannulated Screw Systems for treating patients with fractures and fusions in September after receiving FDA 510(k) clearance in July
- Received FDA approval for the PediFoot surgical system in August
- Updated full year 2019 revenue guidance from growth in the range of 23%-25% to 24%-25%
Mark Throdahl, President and Chief Executive Officer of OrthoPediatrics, commented, “We continue to execute all our key growth initiatives successfully, driving record revenue of $20.7 million and more than 31% growth year-over-year. Our third quarter revenue reflects sustained momentum as we scale our domestic and international businesses, which grew 35% and 16%, respectively, in the quarter. All three of our businesses supported this growth, with Trauma and Deformity growing 31%, Scoliosis growing 29%, and Sports Medicine/Other growing 90%. We expanded our Total Addressable Market with the recent acquisition of Orthex and are most encouraged by the sales growth and surgeon conversions during the first full quarter we owned this business. This demonstrates our ability to integrate a major acquisition and validates our conviction that this innovative external fixation technology will thrive in the hands of our focused pediatric sales force. We are maintaining our target of $15-$17 million in consignment sets for the year and are anticipating continued benefits from Orthex and pending launch of PediFoot later this year.”
Mr. Throdahl continued, “We remain committed to an exclusive focus on the pediatric market and are extremely confident that we will sell the adult Vilex business by year-end, thus recouping a meaningful portion of our initial investment. We believe our growing sales force will support increased sales of Orthex and will drive the adoption of new products and sets. Furthermore, we are encouraged by consistent physician feedback—from experienced and newly trained surgeons alike—that confirms the importance of our clinical education programs. Finally, we are pleased that we continue to produce improved operating metrics, including increasing gross margin to 77% and turning Adjusted EBITDA to a positive $703 thousand. With our substantive progress year-to-date, we remain on track for another year of strong growth that supports our updated revenue guidance of 24-25%.”
Third Quarter 2019 Financial Results (Including Orthex)
Total revenue for the third quarter of 2019 was $20.7 million, a 31.1% increase compared to $15.8 million for the same period last year. U.S. revenue for the third quarter of 2019 was $16.8 million, a 35.1% increase compared to $12.4 million for the same period last year, representing 80.9% of total revenue. International revenue was $4.0 million, a 16.5% increase compared to $3.4 million for the same period last year, representing 19.1% of total revenue.
Trauma and Deformity revenue for the third quarter of 2019 was $13.8 million, a 31.0% increase compared to $10.6 million for the same period last year. Scoliosis revenue was $6.5 million, a 28.7% increase compared to $5.0 million for the third quarter of 2018. Sports Medicine/Other revenue for the third quarter of 2019 was $0.4 million, an 89.6% increase compared to $0.2 million for the same period last year.
Gross profit for the third quarter of 2019 was $15.9 million, a 32.7% increase compared to $12.0 million for the same period last year. Gross profit margin for the third quarter of 2019 improved to 76.6%, compared to 75.7% for the same period last year.
Total operating expenses for the third quarter of 2019 were $17.4 million, a 32.6% increase compared to $13.1 million for the same period last year. The increase in operating expenses was driven by a 49.0% increase in general and administration, a 22.7% increase in sales and marketing, and a 24.4% increase in research and development. Operating loss for the quarter was ($1.5) million compared to ($1.2) million for the same period last year.
Net interest expense for the third quarter of 2019 was $1.3 million, compared to $0.6 million for the same period last year.
Net loss from continuing operations for the third quarter of 2019 was ($2.9) million, compared to ($1.9) million for the same period last year. Total net loss including discontinued operations for the third quarter of 2019 was ($2.7) million, or ($0.18) per basic and diluted share attributable to common stockholders compared to ($1.9) million, or ($0.15) per basic and diluted share for the same period last year.
Adjusted EBITDA for the third quarter of 2019 was $0.7 million as compared to ($0.1) million for the third quarter of 2018. The change was primarily driven by the increase in revenue and associated gross margin. See below for additional information and a reconciliation of non-GAAP financial information.
The weighted average number of diluted shares outstanding for the three-month period ended September 30, 2019 was 14,639,020 shares.
In the third quarter of 2019, we had 158 sales representatives, including Orthex, up 21.5% compared to 130 in the same period of 2018.
Purchases of property and equipment during the third quarter of 2019 were $2.0 million, which compared to $1.1 million for the same period last year. This investment reflects the deployment of consigned sets, which includes product specific instruments and cases and trays. Including the implants, $1.7 million of consigned sets were deployed during the third quarter of 2019, compared to $2.3 million during the third quarter of 2018.
As of September 30, 2019, cash and cash equivalents were $19.7 million, compared to $21.9 million as of June 30, 2019, and the Company had approximately $51.2 million in total outstanding indebtedness, with no balance outstanding under the revolving credit facility.
Full Year 2019 Financial Guidance
OrthoPediatrics is providing updated financial guidance for the full year 2019, as follows:
- Revenue growth in a range of 24% to 25% year-over-year, updated from prior guidance of 23% to 25%
- Consigned set investments in a range of $15.0 million to $17.0 million, unchanged from prior guidance
OrthoPediatrics will host a conference call on Friday, November 8, 2019 at 8:00 a.m. ET to discuss its financial results. The dial-in numbers are (855) 289-4603 for domestic callers and (614) 999-9389 for international callers. The conference ID number is 4339445. A live webcast of the conference call will be available online from the investor relations page of the OrthoPediatrics’ corporate website at www.orthopediatrics.com.
A replay of the webcast will remain available on OrthoPediatrics’ website, www.orthopediatrics.com, until the Company releases its fourth quarter and full year 2019 financial results. In addition, a telephonic replay of the conference call will be available until November 15, 2019. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The replay conference ID number is 4339445.