Orthopediatrics Corp ((KIDS)) has held its Q2 earnings call. Read on for the main highlights of the call.
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OrthoPediatrics Corp’s recent earnings call highlighted a robust performance, marked by significant revenue growth, particularly in the Scoliosis and OPSB segments. The company showcased promising expansions and product launches, although it faced challenges such as a decline in gross margins and restructuring costs. Despite these hurdles, the positive aspects and growth initiatives seemed to outweigh the challenges, painting an overall optimistic picture.
Record Revenue Growth
OrthoPediatrics achieved a remarkable milestone with record revenue growth of 16% globally in Q2 2025. This impressive growth was driven by market share gains across all business segments, underscoring the company’s strong market presence and strategic initiatives.
Scoliosis Business Expansion
The Scoliosis segment was a standout performer, demonstrating a 35% growth. This surge was fueled by increased sales of innovative technologies such as RESPONSE, ApiFix, and 7D, highlighting the company’s commitment to advancing scoliosis treatment options.
OPSB Expansion Success
The OPSB segment experienced over 20% growth, marking its successful expansion into major markets like New York City and California, as well as internationally in Ireland. This expansion underscores OrthoPediatrics’ strategic efforts to broaden its geographical footprint.
FDA Approvals and Product Launches
OrthoPediatrics received FDA approval for sterile products, marking a significant milestone. Additionally, the first surgical case using the 3P Pediatric Plating Platform Hip system was completed, showcasing the company’s commitment to innovation and product development.
Improved EBITDA
The company’s adjusted EBITDA saw a significant improvement, increasing by 50% from $2.6 million in Q2 2024 to $4.1 million in Q2 2025. This improvement reflects the company’s operational efficiency and financial discipline.
Gross Margin Decline
Despite the positive revenue growth, OrthoPediatrics experienced a decline in gross profit margin, which decreased to 72% from 77% in Q2 2024. This was primarily due to higher growth in the 7D segment and increased international set sales.
Lower International T&D Set Sales
The company faced challenges with lower international Trauma and Deformity set sales, particularly in Latin America, which affected overall growth. This highlights the need for strategic adjustments in these markets.
Restructuring Charges
OrthoPediatrics incurred $3.0 million in restructuring charges related to a global restructuring plan aimed at improving operational efficiency. This move indicates the company’s focus on streamlining operations and enhancing long-term profitability.
Forward-Looking Guidance
During the earnings call, OrthoPediatrics provided updated guidance, highlighting record revenue growth of 16% year-over-year, with total revenue reaching $61.1 million. The company raised its full-year revenue guidance to a range of $237 million to $242 million and maintained its adjusted EBITDA target of $15 million to $17 million. OrthoPediatrics expects to achieve positive free cash flow in the fourth quarter of 2025 and aims for full-year free cash flow breakeven in 2026. Additionally, they have significantly expanded their clinic footprint, surpassing initial 2025 expansion goals.
In summary, OrthoPediatrics Corp’s earnings call conveyed a strong performance with notable revenue growth and strategic expansions, particularly in the Scoliosis and OPSB segments. Despite challenges like declining gross margins and restructuring costs, the company’s growth initiatives and forward-looking guidance suggest a promising outlook. Investors and market enthusiasts will likely find the company’s strategic direction and financial targets encouraging.