Orthofix Earnings Call: Growth Amid Challenges

Orthofix International ((OFIX)) has held its Q1 earnings call. Read on for the main highlights of the call.

Orthofix International’s recent earnings call painted a picture of cautious optimism, with the company reporting several positive developments alongside ongoing challenges. The sentiment was balanced, highlighting revenue growth and improvements in specific business areas, yet acknowledging hurdles like pricing pressures and product discontinuations. Overall, the outlook remains stable with a focus on addressing these challenges moving forward.

Revenue Growth

Orthofix reported first-quarter pro forma net sales of $189.2 million, marking a 6% year-over-year growth in constant currency terms. This growth reflects the company’s ability to maintain a steady upward trajectory despite market challenges.

Adjusted EBITDA Margin Expansion

The company exceeded expectations with its adjusted EBITDA margin expansion, showcasing excellent progress in improving operational efficiency and profitability.

Bone Growth Therapies Performance

The Bone Growth Therapies segment saw a 7% increase in net sales, with an 8% rise in the fracture market. The AccelStim bone growth therapy device continues to outperform, solidifying Orthofix’s market position.

Orthopedics Business Growth

Orthofix’s Global Orthopedics business achieved a 13% growth in constant currency on a same sales day basis, highlighting strong performance and strategic success in this segment.

FDA Approval for AccelStim 2.0

The company received earlier than expected FDA approval for AccelStim 2.0, reinforcing its leadership in bone growth simulation and opening new market opportunities.

TrueLok Elevate TBT System Success

The TrueLok Elevate TBT System has been well-received, with over 90 cases completed and positive feedback from surgeons, indicating strong acceptance and potential for growth.

Spine Business Softness

Orthofix experienced some short-term softness in its spine business due to distributor transitions, impacting biologics and spine fixation segments.

Pricing Pressure in US Spine Fixation

The US spine fixation segment faced pricing pressures due to a joint venture between a large hospital account and a group purchasing organization, affecting revenue.

Negative Impact from M6 Discontinuation

The discontinuation of the M6 product lines posed a challenge, impacting the company’s top-line revenue growth rate, gross margin, adjusted EBITDA, and free cash flow.

Impact of US-Funded NGO Business Reduction

The reduction in US-funded NGO business is expected to have a $5 million negative impact compared to the full-year 2024, adding to the company’s challenges.

Forward-Looking Guidance

For the full year 2025, Orthofix anticipates net sales to range between $808 million and $816 million, excluding the discontinued M6 product lines, implying a 5% growth at the midpoint. The company expects a non-GAAP adjusted EBITDA between $82 million and $86 million, reflecting a 190 basis-point margin expansion compared to 2024. Despite challenges, Orthofix remains committed to its strategic priorities to drive long-term shareholder value.

In conclusion, Orthofix International’s earnings call highlighted a mix of positive developments and ongoing challenges. While the company is making strides in revenue growth and operational efficiency, it must navigate pricing pressures and product discontinuations. The forward-looking guidance suggests a stable outlook with a focus on strategic growth and shareholder value.