Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- OrthoPediatrics Corp (KIDS, Financial) reported a record revenue of $54.6 million for Q3 2024, representing a 37% increase from the same period in 2023.
- The company helped over 33,000 children in Q3 2024, marking a 50% increase year-over-year.
- The Trauma and Deformity segment generated $37.6 million in revenue, showing a 31% growth compared to the prior year period.
- Scoliosis revenue grew by 52% globally, driven by strong case scheduling and new user onboarding.
- OrthoPediatrics Corp (KIDS) raised its full-year 2024 revenue guidance to $202 to $204 million, reflecting a year-over-year growth of 36% to 37%.
Negative Points
- Gross profit margin decreased to 73% in Q3 2024 from 77% in the same quarter of 2023, primarily due to product mix shift and increased set sales internationally.
- Operating expenses increased by 29% to $45.6 million, driven by the addition of Boston O&P and increased spending related to EU-MDR certification.
- The company experienced marginal impacts from hurricanes in September and October, resulting in case cancellations.
- There was a slight delay anticipated in the US launch of the EOS product due to FDA approval pathway discussions.
- International Trauma and Deformity growth was muted by a difficult prior year comparison due to large distributor orders in the previous year.
Q & A Highlights
Q: How did Boston O&P perform in the quarter, and was there any shift in revenue generation between Trauma & Deformity (T&D) and Scoliosis?
A: David Bailey, CEO: Boston O&P performed as expected, with early positive returns from patient flow into clinics. The mix between T&D and Scoliosis remained consistent, and the 52% growth in Scoliosis was not driven by Boston O&P overperformance.
Q: There seems to be a slowdown in T&D performance in Q3 compared to previous quarters. Can you explain why?
A: Fred Hite, CFO: The slowdown is primarily due to a large one-time order from South America last year that did not repeat this year. Domestic trauma was strong, and there are no concerns about the T&D business.
Q: What was the organic revenue growth for the quarter, and what is the outlook for flu and RSV seasons?
A: Fred Hite, CFO: Organic growth can be calculated by excluding the $25 million from the Boston O&P acquisition. For flu and RSV, we expect similar reported cases as last year, with hospitals better equipped to handle them. Staffing at children's hospitals is now normalized.
Q: Can you provide more details on the 7D placements at larger institutions and the current installed base?
A: David Bailey, CEO: Surgeon feedback on 7D is positive, and we have a large funnel of opportunities. The installed base is around 20 units, and placements are expected to drive scoliosis fusion business growth over the next 3 to 5 years.
Q: What is the impact of the 7D placements on future revenue and business strategy?
A: David Bailey, CEO: 7D placements are expected to increase scoliosis fusion revenue, particularly in accounts where we previously had little presence. This will positively impact our business strategy and revenue forecasting for the next several years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
