WARSAW, Ind., Aug. 07, 2019 (GLOBE NEWSWIRE) — OrthoPediatrics Corp.(“OrthoPediatrics”) (NASDAQ:KIDS), a company focused exclusively on advancing the field of pediatric orthopedics, announced today its financial results for the quarter ended June 30, 2019.
Second Quarter & Recent Highlights
- Increased total revenue to $18.2 million for second quarter 2019, up 20.7% from $15.1 million in second quarter 2018
- Deployed $9.3 million of consignment sets during the second quarter 2019
- Acquired Vilex, including its Orthex Hexapod circular fixation technology and proprietary CORA-based x-ray planning software, for $60.2 million
- Increased domestic sales organization to 152 reps, including Orthex, up 22% from the second quarter 2018
- Received FDA 510(k) clearance in July for two new Cannulated Screw Systems for treating younger patients with fractures and fusions
- Received FDA 510(k) clearance in August for PediFoot, the first pediatric-specific to address the most common foot deformities in children
- Updated full year revenue guidance from 21% to 23% growth to 23% to 25%, including Orthex
Mark Throdahl, President and Chief Executive Officer of OrthoPediatrics, commented, “I am very pleased with the momentum we are sustaining in the marketplace and by our record-setting revenues of $18.2 million, the highest achieved in any quarter, despite one less selling day, which had a 2% unfavorable impact. This 21% increase was driven by improved Trauma & Deformity growth, significant international growth despite very strong comparables, an increase in new surgeons using our scoliosis systems, and the initial impact of Orthex. Furthermore, with $9.3 million of deployed sets in the second quarter, we are on pace to achieve our full year set investment guidance of $15-$17 million. We will continue to benefit from these set investments as well as new products, the recent acquisition of Orthex, and our previously-announced partnership with CoorsTek, all which highlight our commitment to innovation and the expansion of our capabilities as we continue to scale the business.”
Mr. Throdahl continued, “We are pleased with the initial integration of the Orthex acquisition and are encouraged by the number of unsolicited expressions of interest in purchasing the adult Vilex business, which we previously reported would be sold later this year. We look forward to growing contributions from Orthex as our sales representatives are trained on this unique product. Overall, we remain confident that this will prove to be another successful year of strong growth that will support our updated revenue guidance of 23-25%.”
Second Quarter 2019 Financial Results
Total revenue for the second quarter of 2019 was $18.2 million, including Orthex, a 20.7% increase compared to $15.1 million for the same period last year. U.S. revenue, including Orthex, for the second quarter of 2019 was $13.8 million, a 20.9% increase compared to $11.5 million for the same period last year, representing 76.1% of total revenue. International revenue, including Orthex, was $4.4 million, a 20.3% increase compared to $3.6 million for the same period last year, representing 23.9% of total revenue.
Trauma and Deformity revenue for the second quarter of 2019 was $11.9 million, a 20.6% increase compared to $9.9 million for the same period last year. Scoliosis revenue was $5.9 million, a 19.8% increase compared to $4.9 million for the second quarter of 2018. Sports Medicine/Other revenue for the second quarter of 2019 was $0.4 million, a 39.7% increase compared to $0.3 million for the same period last year.
Gross profit for the second quarter of 2019 was $13.6 million, a 20.8% increase compared to $11.3 million for the same period last year. Gross profit margin for the second quarter of 2019 was 74.8%, compared to 74.7% for the same period last year.
Total operating expenses for the second quarter of 2019 were $15.4 million, a 15.1% increase compared to $13.4 million for the same period last year. The increase in operating expenses was driven by a 19.5% increase in general and administration, a 12.2% increase in sales and marketing, and a 10.7% increase in R&D. Operating loss for the quarter improved to ($1.8) million from ($2.1) million for the same period last year.
Net interest expense for the second quarter of 2019 was $632 thousand, a 12.5% increase compared to $562 thousand for the same period last year.
Net loss from continuing operations for the second quarter of 2019 was ($2.5) million, compared to ($2.7) million for the same period last year. Total net loss including discontinued operations for the second quarter of 2019 was ($2.6) million, or ($0.18) per basic and diluted share attributable to common stockholders compared to ($2.7) million, or ($0.21) per basic and diluted share for the same period last year.
Adjusted EBITDA for the second quarter of 2019 was $0.6 million as compared to ($0.9) million for the second quarter of 2018. The change was primarily driven by the increase in revenue and associated gross margin. See below for additional information and a reconciliation of non-GAAP financial information.
The weighted average number of diluted shares outstanding for the three-month period ended June 30, 2019 was 14,451,979 shares.
In the second quarter of 2019, we had 152 sales representatives, including Orthex, up 21.6% compared to 125 in same period 2018.
Purchases of property and equipment during the second quarter of 2019 were $3.6 million, which compared to $1.4 million for the same period last year. This investment reflects the deployment of consigned sets, which includes product specific instruments and cases and trays. Including the implants, $9.3 million of consigned sets were deployed during the second quarter of 2019 compared to $2.8 million during the second quarter of 2018.
As of June 30, 2019, cash and cash equivalents were $21.9 million, compared to $52.8 million as of March 31, 2019, and the Company had approximately $51.2 million in total outstanding indebtedness, with no balance outstanding under the revolving credit facility.
An 8-K/A incorporating the financial statements of Vilex and pro forma financial information for OrthoPediatrics is expected to be filed no later than August 20, 2019.
Full Year 2019 Financial Guidance
OrthoPediatrics is providing updated financial guidance for the full year 2019, as follows:
- Revenue growth in a range of 23% to 25% year-over-year, up from prior guidance of 21% to 23%
- Consigned set investments in a range of $15.0 million to $17.0 million, unchanged from prior guidance
OrthoPediatrics will host a conference call on Thursday, August 8, 2019 at 8:00 a.m. ET to discuss its financial results. The dial-in numbers are (855) 289-4603 for domestic callers and (614) 999-9389 for international callers. The conference ID number is 8272519. A live webcast of the conference call will be available online from the investor relations page of the OrthoPediatrics’ corporate website at www.orthopediatrics.com.
A replay of the webcast will remain available on OrthoPediatrics’ website, www.orthopediatrics.com, until the Company releases its third quarter 2019 financial results. In addition, a telephonic replay of the conference call will be available until August 15, 2019. The replay dial-in numbers are (855) 859-2056 for domestic callers and (404) 537-3406 for international callers. The replay conference ID number is 8272519.