Orthofix Medical Inc.

to welcome everyone to the ortho fix first quarter 2025 earnings call all lines have been placed on mute to prevent any background noise after the speaker's remarks there will be a question and answer session if you would like to ask a question during this time simply press star followed by the number one on your telephone keypad if you would like to withdraw your question press star one again thank you i will now turn the call over to julie dewey please go ahead

Thank you, operator, and good morning, everyone. Welcome to OrthoFix's first quarter 2025 earnings call. We appreciate you joining us. I'm Julie Dewey, OrthoFix's Chief IR and Communications Officer. Joining me on the call today are President and CEO Massimo Calafiori and Chief Financial Officer Julie Andrews. Before we get started, please note that our earnings release and the supplemental presentation accompanying this call are available on the Events and Presentations page of the investor section of our corporate website at orthofix.com. Also, this call is being broadcast live over the internet to all interested parties, and an archived copy of this webcast will be available in the investor section of our corporate website shortly after the conclusion of this call. During this call, we will be making forward-looking statements that involve risks and uncertainties. All statements other than those of historical facts are forward-looking statements. We do not undertake any obligation to revise or update such forward-looking statements. Factors that could cause actual results to differ materially are discussed in our most recent filings with the SEC and may be included in our future filings with the SEC. In addition, on today's call, we will refer to various non-GAAP financial measures. Please refer to today's news release announcing our first quarter 2025 results for information regarding our non-GAAP results including our reconciliations of these non-GAAP financial measures to our U.S. GAAP results. Additionally, and unless otherwise stated, all net sales percentage changes discussed will be on a pro forma, same sales day, constant currency, year-over-year basis, excluding the impact from the discontinuation of the M6 artificial disc product lines, and all results of operations that we will refer to will be on a non-GAAP as adjusted basis. Moving to today's agenda, Massimo will open with comments on our performance and business updates. Julie Andrews will then review the specifics of our first quarter results and our 2025 financial guidance. With that, I will now turn the call over to Massimo.

Thank you, Julie. Good morning, everyone, and thank you for joining us for our first quarter earnings call. I'll spend some time providing business updates and information about our key initiatives before I turn it over to Julie Andrews to cover the specifics of our Q1 results and 2025 guidance. During the first quarter, we continue to execute the priorities that we outlined in our three-year plan to transform our business and deliver on our commitment to drive discipline, profitable growth. On a same sales day basis, our first quarter pro forma net sales of $189.2 million represent year-over-year constant currency growth of 6%. I'm also pleased to report that we delivered another quarter of excellent progress in adjusted EBITDA margin expansion that exceeded expectations. As we move forward in 2025, I'm confident we are well positioned for profitable growth as our efforts to further optimize our spine commercial channel begin to bear fruit, and we continue to build on our financial foundation and prudently deploy capital to create long-term value for our shareholders. Our excitement continues to build in our orthopedics business, and the greenfield opportunity we have to redefine the category of limber construction, which I'll discuss in more detail shortly, as well as prospect we have in our bone growth therapies business to further capitalize on cross-selling opportunities and drive penetration in the fracture market with Axel's team. Now, I'd like to provide additional detail for each of our businesses. Our US spinal fixation business grew 5.4% on a same sales day basis. We are successfully accelerating targeter distributor transition in a few US territories in order to maximize our growth opportunity and more closely align with our strategic focus. As a result, we did experience some short-term incremental softness in biologics and spine fixation. This transition won't be completed until later this year and will require some time to take full effect, but is expected to result in a stronger, more scalable commercial organization as we shift into our next phase of growth. Once our optimization efforts are completed, we expect growth to return to historical levels. During the quarter, we continue to gain share in product categories where we recently launched new products, including our ELIF, MIS, and cervical fusion portfolios, all of which significantly outperformed the market. Beginning in Q2, we have several product launches planned, including the full launch of Reef-L lateral lumbar interbody and additional solution in our Meridian ALIF portfolio. This new interbody design features our proprietary advanced surface technologies and expand our portfolio of lumbar interbody fusion products to address varying surgeon preference and patient anatomies. In parallel, We will integrate our hardware products with access and navigation, creating a comprehensive procedural solution to enhance efficiencies and predictabilities in the OR. At the same time, we continue to leverage our differentiated 7D flash navigation platform to create longstanding relationships with our surgeon partners. We continue the investment We expect that our next generation advancements in enabling technology and our hardware portfolio will build upon this unique foundation and establish us as the partner of choice for surgeons seeking real-time data-driven intraoperative solutions in the OR. We believe that our comprehensive portfolio of spinal hardware, biologics, and enabling technologies and steady cadence of innovation will enable us to attract top sales talent, increase exclusive distributor relationships, and drive secure relationships with surgeons and hospital accounts, which we expect to result in incremental product pull-through as well as ASP lift from mixed benefits. Now, turning to bone growth therapies. On a same sales day basis, BGT net sales grew 7% overall in Q1 and investments in the fractured market sales channel drove 8% growth in BGT fracture with Axel's team bone growth therapy device to continue to outperform the market. Our BGT business is focused on maximizing our market-leading position with the most comprehensive portfolio and the most indications on bone growth stimulation devices in the market. We will continue to focus on cross-selling with orthopedics and spine, adding new market channels with established sales representatives, and driving penetration in the fracture market with axle stims. Speaking of AxelSteam, we received an earlier than anticipated FDA approval for our AxelSteam 2.0 in the first quarter. This approval reinforces orthophix position as the market leader in bone growth simulation and represents a significant advancement in low-intensity pulse ultrasound technology. As the first and only such device, to incorporate remote therapeutic visibility through integration with the STEAM on Track mobile app and physician portal. Access STEAM 2.0 is expected to be available later this year. I continue to be impressed by the commercial execution of the BGT team. Our global orthopedic business had a strong start to the year. delivering a constant currency growth of 13% on a same sales day basis in Q1 compared to prior year. US orthopedics benefited from strong execution and grew 12% also on a same sales day basis. Growth was led by the combination of our TrueLock and FitBond products as well as growth in the Galaxy fixation product family and Oscar bone cement removal products. As we covered in our last earning call, OrsoFix is redefining the category of limb reconstruction with a unique portfolio of solutions that empower surgeons to excel in limb preservation, deformity correction, limb lengthening, and complex fracture management. Together, these segments represent a market opportunity in excess of 1.7 billion, one of the fastest growing categories in orthopedics. We are particularly excited about the upcoming full market release of the TrueLock Elevate TBT system, which is indicated to correct non-unions and bony or soft tissue deformities or defects, which could include non-healing wounds, ulcers, and deep tissue wounds. According to the American Diabetes Association, over 160,000 amputations occur each year in the U.S. as a result of diabetic-related complications, representing a sizable market opportunity of approximately $1.2 billion. The TrueLock Elevate TBT system is currently in limited market release at selected centers in the US and Europe. Surgeons participating in the limited release are witnessing firsthand the transformative potential of this product and treating condition that previously would have almost certainly resulted in limb amputation and drastically reduce patient's quality of life and their life expectancy. TrueLock Elevate is already making a real difference. We are continuing to prepare for a full market launch of TrueLock Elevate in Q3. These include confirming reimbursement coding and actively gathering feedback from surgeons involved in the initial rollout. This feedback will be crucial for successful full launch in the coming months. With over 90 true lock elevated case completed so far, surgeon response has been overwhelmingly positive, and interest from the orthopedic community continues to grow rapidly. True lock elevate, now enables surgeons to effectively address challenging conditions in a patient's extremity by allowing for an efficient and reproducible method to create a bone segment in the tibia that can be gradually destructed over a period of several days. Published clinical research has shown this approach improves blood circulation to the affected limb and promotes wood healing in diabetic foot. Potentially, reducing the need for an amputation, lowering associated mortality risk, and alleviating the long-term health care costs linked to limb loss. Thus, TrueLock Elevate offers the potential to not only be a limb and cost-saving device, but most importantly, a life-saving solution to a challenging patient population. In addition to TrueLock Elevate, orthopedics growth in 2025 will be fueled by a number of new product introductions that we expect to capture additional market share with existing and new customers. These include the FitBone bone transport and lengthening nail, the only bone transport nail available in United States, and the FitBone trochantering nail. We expect all of these products to be in full market release in the second half of 2025. Our focus on limber reconstruction is yielding significant results, particularly in the USA market, and we anticipate this will be a key growth driver for Orsofix for many years to come. Overall, we are in great positions 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 have a healthy commercial pipeline that we believe is poised to deliver substantial revenue growth in the coming months. Importantly, the breadth and depth of orthophic spine and orthopedic offerings provide multiple paths to grow the business as sustained above market rates. We remain the market leaders in bone growth therapies, have a comprehensive market-leading biologic portfolio, and differentiate the products in several specialized orthopedic markets, such as complex trauma reconstruction and limb deformity correction. Our broad and spanned portfolio is world-class and is fully supported by a highly differentiated and compelling enabling technology. Looking ahead, we are focused on three strategic priorities. First, further sharpening our commercial execution to drive deeper market penetration through our comprehensive portfolio offering, including the adoption of our 7D fresh navigation system. Second, implementing projects to improve our gross margin. And finally, focus on undisciplined capital allocation, adjusted EBITDA expansion, and positive free cash flow generation. Insurance, we are well positioned to create long-term value for our shareholders in 2025 and beyond. At the same time, We are confident that our emphasis on responsible capital deployment within our businesses and the emphasizing areas where we have less scale or share will also drive our transformation, support profitable growth, and increase penetration of our technology and product platforms in areas where we can win. In summary, after one year with this new management team, Orthofix is operating with greater discipline, executing our priorities, and strengthening our balance sheet. I believe we are very well positioned to deliver on our commitment to drive profitable growth and innovation while increasing long-term shareholder value. With that, I now turn the call over to Julie to review our first quarter financial results and our 2025 guidance.