Orthofix Medical Inc.

Thank you, Julie. Good morning, everyone, and thank you for joining us for our third quarter earnings call. I'll spend some time providing business updates and outlining our long-term strategic initiative before I turn it over to our CFO, Julie Andrews, to cover the specifics of our Q3 results, guidance, and our new three-year financial goals. The third quarter represents an important inflection point in this new chapter for Orthofix, including record performances in our USA Orthopedics business and in the number of 7D earnouts agreements. We also matched our record for the highest number of 7D unit placements in any quarter to date and keep seeing strong demand for our spine succession products. As shown on slide 5, we continue to deliver above-market growth led by strengths in our USA markets. The entire company is focusing on innovation and responsible growth. We had another quarter of strong adjusted EBITDA margin expansion, with positive free cash flow of $5.9 million. reaching this significant milestone earlier than we expected. All of this keeps us on a clear course to achieve our 2024 financial targets. Our operating and financial discipline allows our team to execute on our key growth initiatives and reinvest in our innovation priorities. I can confidently say that the business fundamentals are excellent and we have positive momentum to continue leveraging our strategic advantages in 2025 and beyond. Our third quarter net sales results of $196.6 million represents year-over-year growth of 7% on a constant currencies basis. Growth was led primarily by strengths in our U.S. spine fixation and bone growth therapy, or BGT, businesses, as well as continued market penetration in U.S. orthopedics. U.S. spine fixation had an outstanding quarter and grew 18% more than triple the market rate with healthy double-digit growth across all three of our franchises, cervical fusion, interbody, and thoracolumbar fixation. Revenue growth was driven by continuous strong market demand of the recently launched REEF and Waveform interbody products, along with the onboarding of new experienced distribution partners. More specifically, our ALIF, lateral, and MIS portfolios all grew in excess of 35% and significantly outperformed the market due to increased focus on procedural selling. New product introductions are a driving force and continue to open doors to new surgeons. The combination of our access instrumentation, 7D, Our biologic portfolio and the new interbody designs that features Orsafix proprietary advanced surface technologies is supporting our differentiation in the marketplace. We are committed to our surgeons and patients that look to our technology to increase speed, improve accuracy, and advance outcomes. BGT grew 9% overall and 13% in fracture, further highlighting the benefit of cross-selling in our integrated spine and orthopedics channels. We already hold the number one market share position in BGT spine market and continue to take share with more than 50% of the growth coming from new customer acquisitions. In addition, Investment in the fractured market sales channel drove 13% growth in BGT fracture, with the Axelsteam bone growth therapy device continuing to outperform the market. As a reminder, the fractured market represents an opportunity of more than $200 million, and we are still in the very early innings of building our position in the market. with a clear goal to become the number one player. US Orthopedics benefited from strong execution and grew 15%. Growth was led by the combination of our TrueLock and FitBond products, as well as growth in the Oscar product family, which facilitates the removal of bond cement during joint revision. As a result, I'm happy to report that our USA Orthopedics business delivered a record revenue quarter. In enabling technologies, we entered into a record number of 7D flash navigation system earnouts agreements and matched the record for the highest number of 7D unit placements in any quarter to date. We are leveraging our differentiable platform to create long-standing relationships with our surgeon partners. In addition to reiterating our full year 2024 financial guidance, we are also introducing our new 2027 financial targets, which reflect our confidence in sustainable growth trends, the strength of our differentiated and expanded product portfolio, which continues to win shares, and our commercial strategy and focused execution. Julie Andrews will discuss this in detail later in the call. I believe we are very well positioned to accelerate our positive momentum and delivering on our commitment to drive disciplined, profitable growth and innovation, while increasing long-term shareholder value. In summary, I am pleased with our third quarter performance and remain optimistic about the opportunities ahead. It's clear that OrthoFix's focus on executing a clear strategy for profitable growth is delivering compelling results. Through our focus on bringing to market a comprehensive portfolio transformative solutions and delivering unmatched customer service which collectively are helping us drive more profitable sales we have significantly improved our operating and financial position and paved the way for sustainable growth as we look to 2025 and beyond we plan to build on our progress by one further sharpening our commercial focus and discipline for margin expansion. Two, continue to innovate our enabling technology platform to support our renewed focus on spine deformity. And three, ensuring we are well positioned to create value for our shareholders over the long term. As outlined on slide eight in the presentation, We have continued to successfully execute this transformative agenda and are now at an inflection point in our journey that is focused on strategic innovation and operational and financial discipline. With our world-class executive leadership team in place and reinvigorated by our new vision and mission, it's time to introduce our long-term strategy and financial goals. which built on our strong foundation and set us on a clear course for profitable growth. I would like to provide more detail on the multiple levers and vital few initiatives in our long-range plan that we believe will fuel profitable growth and propel our business forward. These include An innovation focus and continued development of differentiated products to meet diverse surgeon preferences. Commercial strategy enhancement to drive deeper market penetration through comprehensive portfolio offerings. Technology leadership that harness advanced systems for improved surgical outcome efficiencies. Emphasis on high quality revenue streams and operational excellence for growth sustainability, and discipline cash flow management, a strategic financial planning to sustain positive free cash flow. At high level, our strategy will capitalize on our clear competitive advantages in addressable markets of approximately $15 billion that are outlined on slide 11 and 12. and includes three key components. One, going deeper into existing accounts. Two, taking advantage of multiple commercial access points across our product portfolio. And three, leveraging our 7D flash navigation system to drive surgeon engagement and build brand loyalty. We are poised to unlock the company's full potential in each of these respective markets with a highly capable team that is ready to execute and deliver on our commitment to discipline profitable growth by providing a life-changing solution and maximizing value creation. First, referring to spinal implants on slide 13, We believe we are well positioned to serve over 90% of the spine surgeon's needs with a comprehensive product portfolio, which includes spinal hardware, biologics, and enabling technology. We also believe that our comprehensive portfolio and steady cadence of innovation will enable us to attract top sales talent increase exclusive distributor relationships, and drive sticker relationships with surgeons and hospital accounts, which we expect to resolve in incremental product pull-through as well as ASP lift from mixed benefits. Moving to slide 14, our BGT business is focused on maximizing our number one market position with the most comprehensive portfolio and most indication of bone growth stimulation prices in the market. We will continue to focus on cross-selling with orthopedics and spine, add new market channels with established self-representatives, and drive penetration in the fracture market with axial stim. Our biologics portfolio, featured on slide 15, is growing from a position of strength. We are a market leader with a number two shares position in biologics with solutions to enhance the fusion process and promote bone repair and growth in each of the major bone grafting categories. Supported by a strong foundation of long-term clinical research, we will continue to leverage opportunities for growth by capturing share with our current biologic offerings in spine and orthopedics. Now, turning to orthopedics on slide 16. We are redefining the category of limb reconstruction with a unique portfolio of solutions that address the most challenging orthopedic conditions in patients of all ages. We are just beginning to expand into the US orthopedics market, which presents incredible growth opportunities given our unique and innovative product lines. Our focus is on areas where we can win, particularly in deformity correction, limb restoration, and limb lengthening. We have received recent 510K clearances for a number of products that are now in limited market launch and are expected to capture additional market share including the Fitbon bond transport and lengthening nail, the only bond transport nail available in the United States. Finally, as shown on slide 17, we believe that our 7D flash navigation system represents a unique opportunity to drive surgeon and hospital account interest and growth across our broader Orthofix portfolio. The reorganization of our 7D commercial structure under the leadership of our spine team is already paying dividends, as evidenced by the record number of 7D earn-outs agreements and unit placement in 3Q. As the world's first radiation-free machine vision image-guided surgical system, 7D continues to revolutionize final navigation, making it faster and more efficient. With the capability for registration in mere seconds versus 30 minutes or more for competitive system and requiring no intraoperative radiation, 7D technology is proving compelling to surgeons. While we offer both MIS and open surgery solutions, keep in mind that open surgeries still represent approximately 80% of the total current spine interventions, positioning 7D as a key driver of incremental navigated procedure penetration. With the evolution of our 7D strategy, we are more confident than ever in its increasingly significant role in our portfolio. This shift will allow our enabling technologies team to drive software innovation and enhance product integration alongside the R&D pipeline as we launch impactful products across all our franchises. We are highly motivated by the opportunity to differentiate ourselves through the combination of our hardware portfolio with our enabling technology platform system. Surgeons and their patients remain our primary focus, and we will continue to provide a differentiated and unique approach to navigation in the OR. Underpinning our business strategies are significant cross-portfolio commercial opportunities that are highlighted on slide 18. The breadth and depth of orthophic spine and orthopedics offerings provide multiple paths to grow the business as sustained above market rates. For example, we are already taking advantage of opportunities to cross-sell our BGT products into Spine accounts, as well as introducing spinal hardware, biologic, and navigation to our Spine BGT surgeons. We also have additional opportunities with our biologics and fracture stimulation products through our orthopedics channel. Overall, OrthoFix is in a great position to capitalize on our recent product launch successes and deliver meaningful innovation to improve outcomes and efficiencies for our surgeon customers and their patients. we remain the market leaders in bone growth therapies, have a comprehensive market-leading biologics portfolio, and differentiated products in several specialized orthopedic markets, such as complex trauma reconstruction and limb deformity correction. Additionally, our broadened spine portfolio is world-class and is fully supported by the highly differentiated and compelling enabling technology. Looking forward, I believe we are uniquely positioned to accelerate our profitable growth engine, which is reflected in our goals for consistent above-market growth, improved profitability, and positive free cash flow. As shown on slide 21, we intend to invest in differentiated technologies in areas where we can lead and win with innovation. We will take a systematic approach to driving innovation with rigorous allocation of resources to high return opportunities. Over the course of our plan, we anticipate investing approximately 8% to 9% of sales each year in R&D, which we expect to fuel a regular cadence on meaningful, high-impact new product launches and support sustained share capture in our U.S. spine, U.S. orthopedic businesses. Turning to slide 23, we believe we can continue to capitalize on a number of access points that we already have with surgeons to grow the business. we see plenty of opportunity to introduce additional products from our portfolio, such as BGT, Biologics, and 7D, to accounts that already use our spine or orthopedics product. This not only provides us with new entry points and cross-selling opportunities, but also enable us to develop sticker-surge relationships solidify our presence in the account and widen our competitive mode. In summary, we have successfully executed and improved our financial and organizational metrics over the last three quarters and we expect the positive momentum to continue. Our new leadership team and the entire company is well positioned to implement our strategic plan and achieve sustainable, profitable growth across the portfolio. We are on a strong, positive trajectory, and I continue to be optimistic as I look forward. Our new financial targets reflect our confidence in sustainable growth trends and our commercial strategy and execution. I believe we are set up well for a bull market net sales growth significant EBITDA margin expansion, and improving levels of free cash flow generation in 2025 and beyond. With that, I'll now turn the call over to Julie to review our third quarter financial results and outline our new financial targets.

Thank you, Massimo, and good morning, everyone. Sports FX had a strong third quarter delivering total company net sales of 196.6 million or 7% constant currency top line growth. Adjusted EBITDA was 19.2 million with adjusted EBITDA margin expansion of approximately 6 million or approximately 250 basis points. I'll now review financial results for the quarter for each of our business units and then discuss our full year 2024 guidance and new 2027 targets. Bone growth therapies revenue grew 9% to 57.9 million in Q3 and 13% in the BGT fracture market, driven by investments in the fracture market sales channel. This growth was driven by above market performance in both the spine and fracture channels. We do expect our BGT growth to remain above market growth rates, but should moderate somewhat as we move forward in the fourth quarter and beyond. Keep in mind that we hold the number one market position with more than 50% market share in our BGT spine business. This unrivaled leadership position, coupled with the impact as we anniversary gains from surgeons acquired in Q3 and Q4 of last year, impacts our ability to maintain the pace of growth that we have been enjoying over the past several quarters. We will continue to focus on adding new surgeons and competitive surgeon conversions in BGT spine. At the same time, we will also continue our commercial focus in the BGT fracture market where we are significantly less penetrated and see a substantial opportunity to drive new business with orthopedic surgeons. Global Spinal Implants Biologics and Enabling Technologies third quarter revenue was $108.2 million with year-over-year growth of 7%. U.S. spine fixation revenue grew 18% over three times the market growth rate driven by deeper penetration of existing accounts and expansion of our customer base. As Massimo said earlier, we entered into a record number of 7D flash navigation system earn-out agreements and matched the record for the highest number of 7D unit placements in any quarter to date. Our U.S. biologics business grew below the overall market in the third quarter as we accelerated our distributor transformation which had a disproportionate impact on our biologics business. We expect this performance to get back to an above-market pace as we continue to focus on new distributor partnerships, cross-selling initiatives, and the launch of new products such as OsteoStrand Plus C and OsteoCo, which were featured at the recent NASS meeting. The global orthopedics business grew 3% in the quarter, led by 15% growth in the U.S., as a result of strong performance across our portfolio, as well as distributor expansion and sales channel investments. The international business declined 2% versus prior year. As we've previously said, due to the nature of this business, particularly around the timing and volume of stocking distributor and tender orders, we expect to see variability from quarter to quarter in the growth rates. Adjusting for non-recurring tender orders international sales were in line with market growth. Non-GAAP adjusted EBITDA of 19.2 million was driven by the capture of merger-related synergies and driving leverage on sales growth and represented a 45% drop through on incremental revenue dollars. We remain encouraged by these results as we are seeing the impact of merger-related synergies and our ability to drive leverage on sales growth materialize. From a cash standpoint, our total cash balance, including restricted cash at the end of Q3, increased to approximately $32.6 million. As shown on slide 27, our free cash flow generation was $5.9 million in the quarter, a significant improvement over the first half of this year. This was a result of higher EBITDA as well as improvements in working capital usage. We also announced today that we successfully completed a new $275 million financing to replace our existing credit facility, which will further optimize the company's capital structure to support long-term profitable growth. Summarized on slide 28, the completion of this refinancing initiative is an important step in OrthoFix's trajectory and provides us with more favorable terms and a lower cost of capital under which we can continue to invest in the growth and evolution of the company. Overall, we are pleased with our third quarter results and our performance to date, which has been characterized by steady improvements throughout the year, including significant progress in adjusted EBITDA and becoming free cash flow positive, both of which underpin our confidence and our ability to drive long-term profitable growth. Moving on to 2024 full-year guidance on slide 29, we are maintaining our guidance for full year net sales of 795 million to 800 million, representing implied growth of 6.6 to 7.2% year over year on a constant currency basis. Please note our expectations are based on current foreign exchange rates and do not account for rate changes that may occur through 2024 or contemplate any potential impact to elective procedures as a result of IV fluid shortages or other hurricane-related effects. We are also maintaining our full-year 2024 non-GAAP adjusted EBITDA of $64 million to $69 million and expect to be free cash flow positive for the remainder of 2024. For the remainder of the year, we expect growth margin, operating expenses, depreciation expense, stock-based compensation expense, interest and other expense, and adjusted EBITDA margin improvement to remain in line with the directional remarks we provided on our second quarter call in August. Now I would like to discuss our new three-year financial targets for 2025 through 2027. These are outlined on slide 30. We are still early in our journey focusing on the vital few initiatives Massimo outlined earlier and that we believe will enhance operational excellence and drive business performance. We also have a strong infrastructure in place with plenty of available runway to drive higher margins and profitability across the company. Importantly, we believe these targets build on the positive momentum we've generated and put us on an accelerated path to profitability with a stronger financial profile to maximize value creation. First, we expect to deliver 6% to 7% net sales CAGR from 2025 through 2027. This assumes sustained market demand with weighted average market growth of 4% to 5% that includes a negative pricing impact of 1% to 2% and no material change in the reimbursement or regulatory environment. We expect mid-teens non-GAAP adjusted EBITDA as a percent of net sales for the full year 2027. This assumes approximately 300 basis points of gross margin expansion over the period capture of about 10 million in remaining merger synergies, fixed cost leverage, and moderating expense growth. We anticipate positive free cash flow generation from 2025 through 2027. This assumes continued adjusted EBITDA improvement, reduction in inventory days on hand, and improved instrument utilization. With a compelling combination of profitable above-market growth and a stronger financial profile, We believe our focused commercial strategy and broad differentiated technologies combined with a robust innovation pipeline and our pace setting enabling technologies position us well to achieve these targets and deliver increased value to our shareholders. Now, before we open up the call for questions, let me turn it back to Massimo for concluding comments. Massimo?

Thanks, Julie. In closing, I want to express my appreciation to our entire Orsofix team and our committed commercial partners for their effort in Q3. Their contributions have been instrumental in driving our performance. We have made great progress here today. We more than tripled the market growth rate in spinal fixation, healthy double digit growth across all three of our spine franchises, orthopedics back on track, strong demand for our enabling technology, commercial transformation that is very well underway and already paying dividends, strengthening our profitability profile and reinforcing our commitment to expanding gross margin, growing adjusted EBITDA, sustaining positive free cash flow, and increasing our liquidity at a better cost. I'm confident that building blocks for sustainable, profitable growth and life-changing innovation are in place. We are moving forward as one team and are not letting up on the operational efficiencies and strategic execution it will take to deliver sustainable, profitable growth across our portfolio and drive long-term value for surgeons patients, and shareholders. I'm confident we have the people, the technology, and the strategies to unlock the company's full potential in each of our respective markets and realize our vision to be the arrival partner in MedTech delivering exceptional experiences and life-changing solutions. Operator, let's now open the line for questions.