OrthoPediatrics Corp.

Good afternoon and welcome to the Orthopediatrics Corporation third quarter 2025 conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to Tripp Taylor from the Gilmartin Group for a few introductory comments.

Thank you for joining today's call. With me from the company are David Bailey, President and Chief Executive Officer, and Fred Height, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company's remarks include forward-looking statements within the meaning of federal security laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to numerous risks and uncertainties, and the company's actual results may differ materially. For discussion of risk factors, I encourage you to review the company's most recent annual report on Form 10-K, which was filed with the SEC on March 5, 2025, and its subsequent quarterly reports on Form 10-Q. During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors in evaluating its operations period over period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure in the third quarter earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitute for orthopediatrics financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, October 28, 2025. Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to David Bailey, President and Chief Executive Officer.

Thanks, Chris. Good afternoon, everyone, and thank you for joining us today. We are proud to start this call with our typical and most meaningful performance metric. In the third quarter, we supported the treatment of more than 37,100 children, increasing our total impact to approximately 1.3 million kids' health. With too few solutions designed specifically for children and the clinicians who care for them, pediatric health care has long faced critical gaps. At OP, we are committed to addressing these unmet needs. And our mission to close those gaps and reshape the future of pediatric care remains clearer than ever. We have made tremendous progress in this market, but there is still a substantial market opportunity ahead. In the third quarter, we saw strength in all areas of our business, excluding 7D capital sales and LATSAM international stocking and set sales. In fact, we saw total third quarter global revenue growth, excluding 7D capital sales, of 17%. and domestic revenue growth, excluding 70 capital sales, of 19%. Both TND and scoliosis implant sales were strong, as we saw a very normal summer selling season, and OPSB growth continues to be extremely robust, with growth in excess of 20%. As a reminder, OPSB sales are approximately 80% TND and 20% scoliosis, and we saw strong growth in both areas. As we highlighted in our preliminary announcements, Our revenue results fell short of our expectations, driven by two isolated factors. Seventy capital sales that were expected in the quarter did not close prior to the quarter end, and headwinds from stocking and set sales in Latin and South America have continued longer than expected. Although these two areas did not produce the results we wanted, these are two of our lower margin segments, and because the rest of the business remained strong, we still delivered high gross margins and profitability in line with our expectations. Looking beyond the top line for the third quarter, we are pleased to see a significant 56% improvement in adjusted EBITDA, growing to $6.2 million. In addition, we also saw huge progress with our free cash flow usage, which was dramatically lower in the third quarter, decreasing $8.2 million. Both of these metrics have been a focal point of our strategy, and we are succeeding in delivering our goals. Touching briefly on our outlook, As announced previously, for the full year, we now expect revenue to range from $233.5 million to $234.5 million. Adjusted EBITDA is still expected to be $15 to $17 million, and we're on track to deploy 15 million insets and generate positive free cash flow in Q4. Even though our top-line expectations have been adjusted, we are maintaining our profitability and free cash flow outlook. As we drive toward our profitability goals, Our core business, consisting of trauma and deformity and scoliosis implants, specialty bracing, and our international agencies, generates higher margins and better free cash flow than the capital sales and LATFAM stocking and set sales. Our core businesses are positioned to remain the key engines of revenue growth, adjusted EBITDA, and free cash flow, and we are confident in our forecast of generating positive free cash flow in Q4 and breakeven in 2026. Turning to our segments. In the third quarter of 2025, the T&D business grew by 17% in the quarter, driven by continued strong market share gains across several product lines. More specifically, growth was led by strong performances in trauma implants and a return to normal scheduling in the elective limb deformity business. Extremely strong XFIX growth and the continued high growth of OPSB were the highlights in the quarter. Taking a closer look at trauma, We saw particularly strong revenue gains driven by continued rapid adoption of PMP femur, PMP tibia, Orthex, and the BioRetech Activus group. Looking closer at the 3P platform, following the FDA approval of the 3P pediatric plating platform HIP system and its first surgical cases, we are seeing consistent case growth, which we expect to continue through the remainder of the year and to ramp aggressively as we begin the full launch of this product in 2026. Additionally, we are pleased to have recently accomplished another milestone for this platform, as we have just announced the next 3P system in the series, 3P Small and Mini, has been approved by the FDA. This approval comes ahead of schedule, and we now expect to complete the first cases in the beginning of next year. With the 3P platform, we expect to launch new systems each year for the next several years, bolstering both trauma and limb deformity revenue. T&D remains a core growth engine for our business. powered by our expanding scale, ongoing market share gains, and a steady cadence of innovation focused on unmet clinical needs. We have established ourselves as a market leader in T&D, and we are executing with confidence, especially as we see more competitors exiting the space by removing pediatric-specific product lines. Our OPSB specialty bracing strategy continues to build momentum, and with continued execution of our operational goals, our confidence in this long-term opportunity only strengthens. This segment represents a high-potential, capital-efficient growth avenue and is an integral part of our company strategy. We will continue our efforts to drive targeted territory expansion, accelerate R&D efforts, and continue scaling our sales force. As a reminder, when we acquired Boston LMP in January of 2024, there were 26 operational clinics. As previously reported, since then, We have expanded to more than 40 clinics, entered into eight new territories, and launched several new products. Our preliminary expectations for new clinic return on investments, 25% for new clinic acquisitions, and 40% for new greenfield clinics are being realized. During the quarter, we expanded our footprint into two very large markets, New York City and California. We expanded Denver and Ohio, and for the first time, we expanded internationally with a clinic in Ireland. These latest additions continue to reinforce the importance and need for OPSB clinics, and we anticipate that the strong wave of clinic expansion opportunities, driven by high customer demand and a robust pipeline, will continue. In addition to expansion opportunities, same-store sales growth has been increasing and generating positive momentum. Our OPSB strategy is delivering strong results and has proven to be a highly efficient expansion path for orthopediatrics. Our presence outside the operating room allows us to create deeper partnerships with our customers. This powerful strategy is extending our leadership position in pediatric orthopedics. We remain focused on executing our strategy with precision as we work towards securing a leading share in this growing market. Moving to the scoliosis business. Our growth of 4% seen in scoliosis this quarter was led by strong U.S. scoliosis implant and scoliosis OPSB growth. by $2.3 million lower 7D capital sales. U.S. scoliosis growth continues to be led by new users adopting orthopediatrics technology, including response, as well as pull-through from past 7D placements. As mentioned, the underlying OUS business grew nicely, but was negatively affected by reduced stocking and set sales in Lat-San, primarily Brazil. We expect this will continue for the next several quarters, but are working on an improvement plan to implement in the near future. 7D sales in the quarter were impacted by increased variability in the timing of unit placements that caused delayed capital sales, and the corresponding revenue from those placements had a significant impact on quarterly sales and overall growth. Typically, there are a few 7D unit sales within the quarter, but for the third quarter 2025, there were zero unit sales. This compares to our strongest 7D unit sales results in the third quarter of 2024. We still expect 7D to be a revenue driver for us, but we cannot predict how much and which quarter sales will fall in. To minimize the impact of lumpy 7D unit sales, we have adjusted our outlook so there is minimal impact on our expectations, which does result in negative growth assumptions from this segment. Looking at our EOS product portfolio, we are pleased to see that our portfolio expansion strategy continues to be effective. In particular, We are seeing positive trends with our recently launched VertiGlide spinal growth system for skeletally immature patients. Following the first completed cases in August, we are seeing solid adoption of VertiGlide through the limited release and will remain on target for the full market release in the coming months. We are excited about the progress made within this portfolio and look forward to progressing the remainder of our EOS products. Moving to international. International underlying sales were solid in the quarter due to extremely strong demand and surgical volume in EMEA and APAC, offset by unfavorable growth from LAT-SAN. The underlying revenue largely comes through our sales agencies and represents a good reflection of high surgeon usage and higher margin replenishment revenue. We are particularly excited to see our EMEA scoliosis launch going so well and are eagerly awaiting the EU MDR approval of our 4.5 scoliosis system. along with multiple other approvals expected for the end of year. On the other hand, the headwinds in LATFAM have persisted longer than we anticipated. In an effort to focus on improved cash metrics, we have made the conscious decision to limit new stocking and set sales to South America. This dynamic continues to play out and negatively impacts our growth, particularly in Brazil. We believed that at this point, our LATFAM business would be in a more stable position and that we would see the benefit of growth in Latin South America again. However, We experienced continued disruption in sales, largely related to timing of large stocking and set orders. We're working towards solutions, but expect there to be some variability here moving forward, which we have reflected in our outlook. In summary, we are proud of the way the business performed, excluding 70 in LATSAN. Orthopediatrics continues to lead the pediatric orthopedic market and provide comprehensive solutions to support the care of children. We remain focused on execution across the business, including scaling of OPSB, leveraging previous set deployments, and launching innovative new products. This strategy will support revenue growth, increase adjusted EBITDA, while meaningfully reducing cash burn as we work towards achieving free cash flow breakeven in 2026. Lastly, we believe our strategy positions orthopediatrics to help more children than ever before. With that, I'd like to turn the call over to Fred to provide more details on our financial results. Fred?