ORTHOPEDIATRICS CORP — Call Transcript 2026

All right. I think we're ready to go. Thank you so much for joining us. Just by way of background, my name is Matthew Blackman. I am a member of the TD Cowen MedTech research team. It's my great pleasure to have with us today senior leadership from OrthoPediatrics. To my left, we have David Bailey, President and CEO. To my far left, Joe Hauser, President of Trauma and Deformity, as well as OPSB, which is the bracing business. Thank you guys for joining us. Really appreciate you making the trip. I think this is your first TD Cowen conference. It is. It is mine as well. I appreciate you being here. Maybe if we could start. You just reported full 4Q results. I'm gonna add my two cents in here, but I think the big highlight, was a very strong free cash flow number in 4Q, and particularly relative to a pre-announced, range that you gave. Maybe if you could take a step back and just, hit the quarter highlights, you know, what stood out, and then we'll take the conversation, look ahead a little bit, and talk about the outlook for 2026. Sure. Great. Matt, thanks for having us. It's been a good conference so far, really appreciate your coverage and an opportunity to be here. Yeah, I think when we look at Q4, business performed really well across all of the sectors of our business. We saw strong demand for T&D implants in the United States, you see numbers outside the United States were very strong. Scoliosis remained very strong, I think on the heels of some of the historic deployments of 7D, where we're seeing volume come through on the scoli side, and some of the early first few procedures with VerteGlide, which has been very positive and I think will impact positively 2026. Like we've seen since we've entered into the OPSB business, that business has performed extremely well. You know, I think you could assume growth in excess of 20% for the OPSB business and likely that to continue into 2026. Business performed well. It was good to see that flow through on the EBITDA side. You know, business nearly doubled on an annualized basis from an EBITDA perspective. As you said, $10 million in FCF for the fourth quarter, which is our first quarter of positive free cash flow and had been something that we set out to do and committed to investors early in the year. I guess I would argue that, from my perspective, I think there's questions potentially on investors' mind that can this business, you know, generate a credible amount of EBITDA, particularly in 2026, enough to generate positive or at least break even cash flow. If you look at the second half of 2025, where, you know, we were cash flow positive for the full second half of 2025, I think, hopefully we put to bed any concerns that with that kind of performance, we wouldn't be able to follow that up with a very strong 2026, get it minimum to break even from a free cash flow standpoint, and then build from there in 2027 and 2028. That's a good segue. Talk about the guidance that you provided. You gave some of the bottom line metrics, there, but, the top-line outlook, margin performance, any of the key metrics, just so we have a base to build off of here. Yeah. Yeah. 11%-13% on the top line from a growth perspective, talking about $25 million in positive adjusted EBITDA for 2026 and at minimum, break even from a cash flow standpoint. We also talked about deploying $10 million worth of inventory in 2026. That would be down from $17 million in 2025. That is certainly not an indication of demand. I think more over an indication of the efficiency we see in our new products in terms of that return on assets, which has been a focus of ours to help drive FCF positive. I think we got a really nice setup here, particularly with some of the products that are launching in 2026, the expansion on the OPSB side. I think we're gonna continue to take share in our legacy business. You know, one thing we didn't talk as much about is very strong international growth in Q4. Maybe a little stronger than we even expected. I think we're gonna see continued, you know, not 33% growth quarter to quarter necessarily in 2026, but I think we're starting to see, you know, nice pull through of some of the products in Europe, really high demand in our agency markets in Europe and Latin America as well as APAC. I would expect to see really strong, you know, growth there as well in 2026. Correct me if I'm wrong, you also got some EU MDR approvals recently. We did. How does that feed into the sustainable growth trajectory internationally? I think, you know, people may or may not know, but we have essentially been growing the European business with one arm tied behind our backs, particularly on the scoli side. We launched our scoliosis business in Europe just a few years ago, and that was with really one size of our scoliosis product. We had about half of the product availability. Pretty difficult to convert surgeons when, you know, if you have a smaller patient, we can't offer our small stature size. We got that approval in Q4, and that business was already growing, but I would expect that to continue into the future. Same thing with our products on the trauma and limb deformity side. I would say about half our portfolio hasn't been available due to just the change in regulation from an MDR perspective. We got those products approved. I like the future in Europe. I think, you know, we would probably expect to see the international business grow a little faster as a result of EU MDR and we have lower share there. Obviously, higher share in the US, but a little lower share in those markets outside of the US. It's not a fair question 'cause Fred's not here, but I'm gonna ask you to speak to. I can say anything now. Yeah. I know. Exactly. The leash is off. If Fred was here, how would he characterize the guide for 2026? I sort of snuck this question in. It feels like sort of a base case... Yeah ... as we think about the 2026 outlook. Yeah. I think that's. You said it, not me. Yeah, I think that's a nice base case. We recognize there's volatility in terms of timing for 7D. We've talked extensively about our work towards improving the AR metrics and some of the working capital metrics in our markets outside of the United States where we're still wholesalers, where we're selling to distributors. You know, in an effort to balance both top line as well as bottom line and free cash flow, we're working really hard on processes inside the business to reduce working capital and drive this business to generate, you know, more cash. We've chosen to moderate certain areas of our business that have historically been more consumers of capital and consumers of cash, and that includes growth in parts of the world like Brazil and Latin America. I think our guide is taking into account a balance between, you know, the opportunities we have against what we think is right for the business from a profitability perspective, as well as doing things that ultimately drive this business to generate its own free cash. Great. Yeah is what we're talking about. That's right. ... at the end of the day. All right, let's transition, and we'll sort of punch through some of the different franchises. We're very lucky to have Joe with us here, who heads up T&D and OPSB. Is that correct? Yeah, that's correct. That acronym is OrthoPediatrics Specialty Bracing. I got that correct. We love the acronyms. Yes. Everyone does. Maybe if we could we start on T&D? It might be helpful just giving the audience if we sort of just give a bit of a background on that end market, what it is, the growth trajectory, competitive intensity. Then we'll sort of laser focus on your positioning there. Yeah. The T&D business, which stands for Trauma and Deformity Correction, or limb deformity, as Dave will put it actually was OP's first product to the market, so it's the roots. It's the beginning of what OrthoPediatrics was. The first system we came out with, system 1 was a Cannulated Screw System. The whole premise strategically behind that was, how do we start to gain more access to these major children's hospitals across the U.S. and eventually across the globe and give our people excuses and reasons to be there? That every time we add a new product system, a new portfolio of products for our surgeons, and that's ultimately been the strategy for the last 10 years, is how do we surround all pediatric orthopedic physicians with everything they need to treat the kids that they treat? Every time we add a new system to that, once we have the access and the right salespeople there, it's pretty easy to see how we grow every time. Now fast-forward, we're over 40 systems in across the marketplace. We're essentially in every major children's hospital, definitely within the United States, and certainly most pediatric centers around the globe with at least one of our systems, if not more. As we chip away at the remaining part of the market that we don't have today, the products that we don't have that they want, you can see how now our access, our people that are there, every time we add a system, it's pretty easy to turn on. You're already approved in the hospital. Same call point, same physician. Same call point, now you're just bringing a new novel technology. Basically a system that every surgeon's asked for, now we bring it to the market and almost instantaneously it can be adopted. I think we do have the favor of the competitive landscape in this market has been pretty benign. Not a lot of people are focused at all in pediatrics only. Any of the competitive companies that we see typically have large adult products and franchises, where oftentimes some of their smaller sizes might make their way into a children's hospital. Some of those were okay, high quality products from an adult standpoint, but don't quite fit the bill of what you need from a pediatric side. I think more interestingly, and the EU MDR that Dave mentioned is a really important component, the requirements for regulatory demands, not only in the U.S. but abroad, have required companies to take a look at their portfolios and say, "Hey, what are we gonna rationalize out of?" Unfortunately, I think the kids, the kids' pediatric products are the first ones to go because they do have a smaller... for each individual product, it's a smaller market space for that one product. The cost to actually keep these products alive from a regulatory perspective is a lot. If you don't have the entire portfolio like a company like OrthoPediatrics has, it really is a struggle to actually just bring one or two products into a niche space already. Yep. Even with the large TAM that we have left, within the U.S. and definitely internationally, we see a lot of our competitors continue to withdraw certain aspects of their portfolios. Also it reaches its way from a channel perspective, where even if you did have a competitive product in the ped space, the channel that was selling it is now focused on other adult related products, which makes it another challenge to be servicing what most reps and people have called our children's hospitals or almost the flyover hospitals... Yeah ... where the big adult centers do the vast majority of volumes, and we stick to our focused children's and pediatric centers. I have to think you layer on top of that just the dislocation that you're seeing in orthopedics broadly, but certainly in some of the companies that you would be bouncing up against, you know, spinning out businesses or selling to private equity. Just another layer, another tailwind potentially for the business over the next several years. Yeah, if you're one of those great organizations, if you're one of those organizations, you double down on your core competency. Yeah. You grow what you're good at, and some of these other ancillary things that sat on the fringes, which happens to be where our business lies, you probably take some focus away from there. Yeah. Makes a lot of sense. Maybe talk about the new product cadence in T&D, you know, It's always challenging in orthopedics. There's always a lot of different products, always hard to isolate what to focus on. In 2026, some new products coming in particular. Can you give us some flavor of what we should be sensitive to? What are the key growth driving incremental new products coming in 2026? Yeah. Dave says it well. I don't know when the term came up, super cycle. I don't either. ... it got put in, it got put into the last report. Super cycle, here we are. Actually it's probably the most accurate way to describe our excitement about what's about to come to the marketplace. Specifically, I try to break the Trauma and Deformity business down into three categories: Plates and Screws, IM nails, and XFIX. Within our Plates and Screws franchise, the 3P Hip System, which is what was launched at a limited basis last year, is now gonna make its way to a full launch this year. When you can add a significant amount of sets there, we see that to provide a bunch of tailwinds from a growth standpoint. The $10 million, I apologize for interrupting, the $10 million in set investments, largely for some of these new products, is that the way to think about it? I think the way to think about it is that we've worked really hard over the course of the last several years from a development perspective to maximize both the technological profile, so these are kind of very unique. They command high average sales prices as well as minimize the economic footprint, so to speak, that requires to put this inventory on the street. Historically, we would argue that we get about $1 of annualized revenue to have $1 of deployed set. We've been working from an internal development perspective to move that number to double, if not triple. So we think about using $10 million in capital that again, is almost entirely VerteGlide on the scoli side and 3P hip on the T&D side. Those assets just get dramatically higher asset utilization metrics. Yes. You are gonna see more of that over the course of the super cycle here. Okay. Sorry. Apologize. No, no, you're fine. You're all right. Yeah, the 3P is so part of the Plates and Screws portfolio. We just began what we'd call a massive reenergizing of that entire portfolio. It includes a little bit of an upgrade standpoint, but I think it has much more to do with stuff that we've never done before. Can you just give us what 3P is? Yeah ... fundamental. Yeah. 3P is super creative on my part, right? The Pediatric Plating Platform so 3P and the whole premise behind it was basically a massive movement from an internal R&D standpoint to develop almost a system per year for the next three or four years, which we started this journey a few years ago, which is now why we're in the launch phase. The whole key to it was that you weren't just going to launch three, four independent systems that don't have a synergy, don't use similar instrumentation, don't bring the cost of our sets down, don't bring the margin profile up in terms of the unique variations that we can offer. The first system was launched last year with 3P hip. The full launch will occur this year. Soon enough, here in the first half of this year, you'll see the next installment of 3P, which will be the Small-Mini System, which is a little bit more of a utilitarian system, but is almost growth from $1 in terms of something we have. These are all incremental. Yeah. Largely. Yep. Yes. Correct. That'll go to a limited launch here this year, which then you can expect that there's a compounding effect into 2027, where we'll do the full launch. Still expected to have a meaningful impact in this current year and certainly out years. Then we have a 3P Knee/Femur system. I don't know what we'll call that yet. Certainly development has already started. That'll be the last of the systems that'll be the major installment. Then when you think about future systems, it's all going to use the same instrumentation, the same drill bits, all the same base systems. We'll just be adding implant sets. You can see is it'll be less cost from a deployment standpoint 'cause it will only be implants we would be deploying at that point. Similar to that $10 million free cash flow, it's again, more efficient. Built into it. Absolutely. Correct. Talk about so just again, you don't have to give me specifics. You did. I appreciate that on the knee and the femur side. Just how do you think about the cadence of new product introductions, the super cycle, one, two products per year per franchise? What's the goalpost that you set for the team, Dave? I think you're talking at least 1 major system launch annually in the 2 implant side of our business. When you think about OPSB, we expect four or five pretty substantial launches of every year. You're talking about a pretty serious volume of launches. I think, you know, we spent a number of years focused on EU MDR, and I think that maybe in years gone by, there was a bit of a gap between heads down focus on organic new product development. Then a few years ago, when we had done our work, we got back into very aggressive NPD. You're just starting to see literally we're in the batter's box here. Yeah ... of the first inning of some of these new products. I think those have a compounding effect where it's not just two very substantial products in 2026, but those tend to ramp more aggressively in the second and third year of that product launch. In the second and third year of the product launches that are launching this year, you'll have the first and second years of the next generation. That's why we talk about this cycle. I think what's really compelling about the products is when we were younger, as a, you know, less, you know, more immature as a company, the clinical risks and the technology risks we were willing to take as a small company were much lower... Small. Yeah. much smaller. Now, I think when surgeons see the products and the work that we put into these, they're high technology, super high value, dramatically more clinically disruptive, and with that commands a higher price. In most cases, these are products that there is no threat of substitute. Our capacity then to walk in and, you know, ensure that we lock down contracts at some of these facilities that pulls through some of our less differentiated products is the strategy here. I think we're again, very early in that process, but I think over the next three years you're gonna see a lot from OP that is very significant. What's the learning curve for some of these docs to these complicated systems with complicated procedures, or is it a typical, you know, five to 10 cases and they're facile with it? Or how does it sort of typically, and I assume it might vary from product to product, but in T&D in particular, the 3P system's challenging something new or no, it's bread and butter kind of stuff? I don't think it's challenging at all for some of these orthopedic surgeons who have experience on an adult side before they even get into pediatrics. There's some new techniques that I think we're bringing to the table. They won't be challenging from a hands skill standpoint, in my opinion, but they offer different ways to go about doing the procedures that we think are more efficient, less time consuming, and less pieces and parts throughout the surgery. Maybe there'll be a little bit of a curiosity in terms of some interesting techniques, but nothing that's difficult. Okay, let's now transition. We'll talk about the bracing business. You mentioned it, so it was a good segue just a couple minutes ago. I think maybe similar framework. What is it? I think importantly, how does it fit into sort of the ecosystem that is OrthoPediatrics? Maybe immediately not apparent why there are synergies, but there clearly are. Maybe help us understand. Sure, yeah. The specialty bracing business is essentially us providing bracing care, which can be done in an O&P or orthotics and prosthetics service model or just an independent product that we can offer all to treat pediatrics and adolescents. When we strategized to get into this space, we did originally called it an adjacency, but it's really not an adjacency. It's pretty tight within our wheelhouse because it's the same customer base, the same surgeon or physician who does our surgical case earlier in the day, goes to a clinic in the afternoon and can prescribe bracing in that same front. It's the front end of that sort of patient journey before there's some sort of invasive procedures. It's actually both. Okay. The back end as well. The front end and the back end. Yeah. I think for us, as we looked at it, we knew number one, from a development standpoint, because it's majority Class I devices, it'd be a much faster development cycle. Two is we understood that from a capital standpoint, we don't need to deploy inventory assets to actually get to this market. The ability to preserve cash, but also still have revenue growth was very important. The customer base, the same. It's the same hospital, same places that all. When you realize that these pediatric orthopedic physicians, surgeons, 80% of what they do on a daily basis actually involves not taking a child into an operating room. Right. The highest volumes of what we can have access to, ultimately, I think we all would wish that not every child needs to have surgery, is there ways to treat them. Really it was us doubling down on our dedication to helping kids with musculoskeletal conditions. If you're not going to be in that 80% space, then you're missing a large portion of the market. Yeah. In some ways, you're surrounding the patient, you're surrounding the physician, you're making yourself indispensable. The hospital. ...in some respects. At the hospital as well. Can you put a little finer point on how to think about the addressable market opportunity for bracing specifically? I don't know, should we think about it relative, more of a, sort of a clinic number relative to the number of children hospitals out there in terms of, you know, how this ramps? Just any way to frame the opportunity. Yeah. We estimate it to be about a $500 million TAM within our focused children's hospital market segment. Within that $300. Mm-hmm. Okay. Yep. Where are we today, do you think? What percentage of that? Yeah, if the market is addressable of $500 million today, the run rate is $50 million. Are we 10% penetrated, 20% penetrated? Yeah, I wish I had a great number for that as we try to. We got a long way to go. That's what I was gonna get to, is that we're barely getting started. If you figure there's 80 target markets that we have talked about, 80 geographical, you know, metropolitan cities that we know there's a very busy OrthoPediatrics implant children's hospital today. When we started on this journey, we were in nine of those. As Dave mentioned, we got to six of those here this last year. Now we're getting closer to the 20 target markets. We have 80 total, it's just a matter of time that we're gonna take it from the 20 to get to these 80 markets. It's not just for O&P care from a clinic perspective, it's also from the product perspective. Okay. Interesting. Big, big runway here, I think, for that business. When I think about the growth here, it's a lot of greenfield opportunity or white space opportunity, however you wanna reframe it, versus sort of same store sales. That's the way to think about it. 100%. We're still very happy with how we can grow our same store sales just by connecting the OrthoPediatrics relationship to what was historically the Boston O&P relationship. That's great, the way to grow and the bigger piece of growth have to do with greenfields. Have you seen, I know it's early days, but pull through of the portfolio more so in those particular accounts that have, you know, an attached bracing, clinic? We have found that all the hospitals that have a clinic on-site or close to it, the approach from the administration of the hospital has been to ask us, "How do we package all of what OP has to offer so that it's not just clinic or it's not just Trauma and Deformity? If we don't have the Scoliosis business yet, is there a way for us to partner?" It's been extremely invigorating for us to take on these challenges to say, "Well, you've had these contracts in the past. We are the only one that can actually offer this entire portfolio. What can we do this a little more unique? You're digging a deeper and deeper moat, even though there's competition. Correct. Yep. I've just been curious, just from the profitability standpoint, how it compares, relative to, let's say, corporate, OrthoPediatrics. I think from a gross margin perspective, the OPSB business has a slightly lower gross margin, although not that much, and it has dramatically lower selling costs. As we think about contribution margin, OPSB is probably a little higher contribution right now than even the legacy implant business, and obviously, there's not capital deployment. Right. I think at the time when capital is expensive, you know, growing through the OPSB model is, I think, quite smart, and obviously, you've heard about the synergies that it's driving with the implant side of the business. I think our thesis is very well intact here in terms of what this could do, not just for the top line over the course of time, but you know, at maturity, what this can generate from a bottom line perspective. How are you governing, you know, sort of measuring how, you know, quickly you get after these opportunities? How much of it is, you know, we wanna grow, we wanna grow profitably? How much is it, you know, got a long opportunity, let's leave some meat on the bone each year? How are you thinking about sort of selecting and sort of how aggressively you go after this, you know, highly underpenetrated opportunity? Yeah, I think we're being pretty aggressive on the OPSB side. We're not going to try to be everything to everybody here. I think that we could certainly potentially grow faster. We are not leveraging the profitability of the OPSB. We're generally leveraging the implant profitability to feed the growth engine that is OPSB right now. We're not running that component of our business for, you know, the positive free cash and for profitability with the kind of growth rate. Yeah. You know, I think that you could expect this business to grow north of 20% for a long time. I mean, it's a, it's a lot of blue ocean in front of us here. Okay. That was my next question, so I appreciate you checking that off the list. Let's now talk about Scoliosis. Yeah. You mentioned VerteGlide. Maybe though similar framework, the Scoliosis opportunity, competitive positioning... Yeah ... VerteGlide would be a nice, sort of foray into what's new. Yeah What's gonna drive growth over the next couple of years. Scoliosis is our, you know, the smaller business obviously than T&D. It represents about 25% of global revenue. A pediatric orthopedic surgeon that does T&D also generally does scoliosis, so we have that, you know, nice relationship. We've been in the market for about 14 years. We might have less than 20% market share inside Children's Hospital. Your competitors there are? Generally Medtronic, DePuy, primary competitors, and there's a long history of, you know, legacy products that have been used from those companies for 30 years. Neither of them are investing. Right. It's the same sort of messaging. Right. Yep. We continue to take share within our fusion business. I would say the fusion market is slightly less differentiated. There's a lot of good companies with good systems that are applicable in pedes, maybe not designed for pedes, but applicable. But we've chosen to invest in early onset scoliosis. We think there's a really nice probably $50 million-$80 million kind of blue ocean market for us here, where there's very limited technology, extremely limited technology development. No one's investing here. And these patients are, frankly, these are very difficult patients to treat, and they're treated by some of the most elite pediatric orthopedic surgeons in the world. You know, where certain larger accounts, we may have not been taken as seriously as a scoliosis provider, even though we are very seriously taken on the T&D side, to be able to generate kind of one of the kind products that meet massive clinical needs for the pediatric orthopedic surgeons is placing us front and center in some accounts that, you know, I don't think have taken us as seriously maybe as some of the larger players like Medtronic. Is that what VerteGlide is? Is that sort of that workhorse product? Is that that type of product to get you there? I think this as well as, you know, our RESPONSE Rib and Pelvic and the LE device that's on its way. I think when you think about that complete portfolio, we have the most comprehensive early onset scoliosis portfolio ever. It demands a serious look, and I think we are definitely getting a serious look by, you know, some of the top children's hospitals on this front. That's great. In these last three minutes, I wanna, you know, take a step back. This is a story that we know, we talk to people as much as we can about. There, you know, there seems to be misunderstanding, you know, gets lumped into the broader... You know, we're simple-minded folks, analysts, and everything. We paint with a broad brush because it's just easier that way. You know, it's either, "Oh, no, that's an orthopedics company," or, "Oh, no, that's a spine company." Maybe help us frame why you're not just a- Yeah ... another orthopedic. We've sort of alluded it, to it, I think, in this conversation. Maybe put a finer point on what makes kids, a differentiated story with a long runway for growth and also improving profitability. I think this is a lot of times a misunderstood notion by investors and even some and analysts over years to that are now really kind of uncovering our story that, you know, we're not a pure play orthopedic company that's competing in all these different verticals, total joint reconstruction, foot and ankle, whatever. We're not a spine company. I mean, only 25% of our revenue is spine, and we truly only have a spine product for a single or a single indication in pediatric spine deformity correction. I think OP is a pediatric company, and we're kind of an N of one in pediatric orthopedics. We've invested a lot to build the most powerful brand and commercial footprint in pediatric orthopedics globally, and we're leveraging that brand. We have extremely long, product development and sales cycles for those products, long tails of growth because we're not in this constant bare knuckle struggle against competitors where the threat of substitute happens so very rapidly. Every three years, you've got to develop the next generation of product. That's just not what the pediatric orthopedic marketplace looks like. We're balancing deployment of resources against, you know, how fast we wanna grow the top line, but not encountering entrenched competitors there. I think that makes us very unique. I think it would be very difficult to supplant us. I think, you know, pediatric orthopedic surgeons really require OrthoPediatrics and some of our products that are so unique that it would be difficult to do some of these surgeries. I think that's a very unique market position, and I'm not sure that you've seen that in other ortho names, much less even in other MedTech names. I think that's kind of misunderstood by the marketplace. We often get compared to small cap spine or small cap foot and ankle. Those companies are great companies, but that's just not what we do. Yeah. Well, I told you we're simple-minded. We like to peg everything. All right. I think we'll wrap it there. Really appreciate. Thank you so much for making the trip. Great to meet you, Joe. Thank you so much everyone for joining us. Really appreciate it. Thanks so much. Thanks, Matt. Thanks. This was great. Appreciate it.

Speaker 3: All right. I think we're ready to go. Thank you so much for joining us. Just by way of background, my name is Matthew Blackman. I am a member of the TD Cowen MedTech research team. It's my great pleasure to have with us today senior leadership from OrthoPediatrics. To my left, we have David Bailey, President and CEO. To my far left, Joe Hauser, President of Trauma and Deformity, as well as OPSB, which is the bracing business. Thank you guys for joining us. Really appreciate you making the trip. I think this is your first TD Cowen conference. All right. all right I think we're ready to go. i think we're ready to go Thank you so much for joining us. thank you so much for joining us Just by way of background, my name is Matthew Blackman. just by way of background my name is matthew blackman I am a member of the TD Cowen MedTech research team. i am a member of the td cowen medtech research team It's my great pleasure to have with us today senior leadership from OrthoPediatrics. it's my great pleasure to have with us today senior leadership from orthopediatrics To my left, we have David Bailey, President and CEO. to my left we have david bailey president and ceo To my far left, Joe Hauser, President of Trauma and Deformity, as well as OPSB, which is the bracing business. to my far left joe hauser president of trauma and deformity as well as opsb which is the bracing business Thank you guys for joining us. thank you guys for joining us Really appreciate you making the trip. really appreciate you making the trip I think this is your first TD Cowen conference. i think this is your first td cowen conference

Speaker 1: It is. It is. it is

Speaker 3: It is mine as well. I appreciate you being here. Maybe if we could start. You just reported full 4Q results. I'm gonna add my two cents in here, but I think the big highlight, was a very strong free cash flow number in 4Q, and particularly relative to a pre-announced, range that you gave. Maybe if you could take a step back and just, hit the quarter highlights, you know, what stood out, and then we'll take the conversation, look ahead a little bit, and talk about the outlook for 2026. It is mine as well. it is mine as well I appreciate you being here. i appreciate you being here Maybe if we could start. maybe if we could start You just reported full 4Q results. you just reported full 4q results I'm gonna add my two cents in here, but I think the big highlight, was a very strong free cash flow number in 4Q, and particularly relative to a pre-announced, range that you gave. i'm gonna add my two cents in here but i think the big highlight was a very strong free cash flow number in 4q and particularly relative to a pre-announced range that you gave Maybe if you could take a step back and just, hit the quarter highlights, you know, what stood out, and then we'll take the conversation, look ahead a little bit, and talk about the outlook for 2026. maybe if you could take a step back and just hit the quarter highlights you know what stood out and then we'll take the conversation look ahead a little bit and talk about the outlook for 2026

Speaker 1: Sure. Great. Matt, thanks for having us. It's been a good conference so far, really appreciate your coverage and an opportunity to be here. Yeah, I think when we look at Q4, business performed really well across all of the sectors of our business. We saw strong demand for T&D implants in the United States, you see numbers outside the United States were very strong. Scoliosis remained very strong, I think on the heels of some of the historic deployments of 7D, where we're seeing volume come through on the scoli side, and some of the early first few procedures with VerteGlide, which has been very positive and I think will impact positively 2026. Like we've seen since we've entered into the OPSB business, that business has performed extremely well. Sure. sure Great. great Matt, thanks for having us. matt thanks for having us It's been a good conference so far, really appreciate your coverage and an opportunity to be here. it's been a good conference so far really appreciate your coverage and an opportunity to be here Yeah, I think when we look at Q4, business performed really well across all of the sectors of our business. yeah i think when we look at q4 business performed really well across all of the sectors of our business We saw strong demand for T&D implants in the United States, you see numbers outside the United States were very strong. we saw strong demand for t&d implants in the united states you see numbers outside the united states were very strong Scoliosis remained very strong, I think on the heels of some of the historic deployments of 7D, where we're seeing volume come through on the scoli side, and some of the early first few procedures with VerteGlide, which has been very positive and I think will impact positively 2026. scoliosis remained very strong i think on the heels of some of the historic deployments of 7d where we're seeing volume come through on the scoli side and some of the early first few procedures with verteglide which has been very positive and i think will impact positively 2026 Like we've seen since we've entered into the OPSB business, that business has performed extremely well. like we've seen since we've entered into the opsb business that business has performed extremely well You know, I think you could assume growth in excess of 20% for the OPSB business and likely that to continue into 2026. Business performed well. It was good to see that flow through on the EBITDA side. You know, business nearly doubled on an annualized basis from an EBITDA perspective. As you said, $10 million in FCF for the fourth quarter, which is our first quarter of positive free cash flow and had been something that we set out to do and committed to investors early in the year. I guess I would argue that, from my perspective, I think there's questions potentially on investors' mind that can this business, you know, generate a credible amount of EBITDA, particularly in 2026, enough to generate positive or at least break even cash flow. You know, I think you could assume growth in excess of 20% for the OPSB business and likely that to continue into 2026. you know i think you could assume growth in excess of 20% for the opsb business and likely that to continue into 2026 Business performed well. business performed well It was good to see that flow through on the EBITDA side. it was good to see that flow through on the ebitda side You know, business nearly doubled on an annualized basis from an EBITDA perspective. you know business nearly doubled on an annualized basis from an ebitda perspective As you said, $10 million in FCF for the fourth quarter, which is our first quarter of positive free cash flow and had been something that we set out to do and committed to investors early in the year. as you said $10 million in fcf for the fourth quarter which is our first quarter of positive free cash flow and had been something that we set out to do and committed to investors early in the year I guess I would argue that, from my perspective, I think there's questions potentially on investors' mind that can this business, you know, generate a credible amount of EBITDA, particularly in 2026, enough to generate positive or at least break even cash flow. i guess i would argue that from my perspective i think there's questions potentially on investors' mind that can this business you know generate a credible amount of ebitda particularly in 2026 enough to generate positive or at least break even cash flow If you look at the second half of 2025, where, you know, we were cash flow positive for the full second half of 2025, I think, hopefully we put to bed any concerns that with that kind of performance, we wouldn't be able to follow that up with a very strong 2026, get it minimum to break even from a free cash flow standpoint, and then build from there in 2027 and 2028. If you look at the second half of 2025, where, you know, we were cash flow positive for the full second half of 2025, I think, hopefully we put to bed any concerns that with that kind of performance, we wouldn't be able to follow that up with a very strong 2026, get it minimum to break even from a free cash flow standpoint, and then build from there in 2027 and 2028. if you look at the second half of 2025 where you know we were cash flow positive for the full second half of 2025 i think hopefully we put to bed any concerns that with that kind of performance we wouldn't be able to follow that up with a very strong 2026 get it minimum to break even from a free cash flow standpoint and then build from there in 2027 and 2028

Speaker 3: That's a good segue. Talk about the guidance that you provided. You gave some of the bottom line metrics, there, but, the top-line outlook, margin performance, any of the key metrics, just so we have a base to build off of here. That's a good segue. that's a good segue Talk about the guidance that you provided. talk about the guidance that you provided You gave some of the bottom line metrics, there, but, the top-line outlook, margin performance, any of the key metrics, just so we have a base to build off of here. you gave some of the bottom line metrics there but the top-line outlook margin performance any of the key metrics just so we have a base to build off of here

Speaker 1: Yeah. Yeah. 11%-13% on the top line from a growth perspective, talking about $25 million in positive adjusted EBITDA for 2026 and at minimum, break even from a cash flow standpoint. We also talked about deploying $10 million worth of inventory in 2026. That would be down from $17 million in 2025. That is certainly not an indication of demand. I think more over an indication of the efficiency we see in our new products in terms of that return on assets, which has been a focus of ours to help drive FCF positive. I think we got a really nice setup here, particularly with some of the products that are launching in 2026, the expansion on the OPSB side. I think we're gonna continue to take share in our legacy business. Yeah. yeah Yeah. 11%-13% on the top line from a growth perspective, talking about $25 million in positive adjusted EBITDA for 2026 and at minimum, break even from a cash flow standpoint. yeah 11%-13% on the top line from a growth perspective talking about $25 million in positive adjusted ebitda for 2026 and at minimum break even from a cash flow standpoint We also talked about deploying $10 million worth of inventory in 2026. we also talked about deploying $10 million worth of inventory in 2026 That would be down from $17 million in 2025. that would be down from $17 million in 2025 That is certainly not an indication of demand. that is certainly not an indication of demand I think more over an indication of the efficiency we see in our new products in terms of that return on assets, which has been a focus of ours to help drive FCF positive. i think more over an indication of the efficiency we see in our new products in terms of that return on assets which has been a focus of ours to help drive fcf positive I think we got a really nice setup here, particularly with some of the products that are launching in 2026, the expansion on the OPSB side. i think we got a really nice setup here particularly with some of the products that are launching in 2026 the expansion on the opsb side I think we're gonna continue to take share in our legacy business. i think we're gonna continue to take share in our legacy business You know, one thing we didn't talk as much about is very strong international growth in Q4. Maybe a little stronger than we even expected. I think we're gonna see continued, you know, not 33% growth quarter to quarter necessarily in 2026, but I think we're starting to see, you know, nice pull through of some of the products in Europe, really high demand in our agency markets in Europe and Latin America as well as APAC. I would expect to see really strong, you know, growth there as well in 2026. You know, one thing we didn't talk as much about is very strong international growth in Q4. you know one thing we didn't talk as much about is very strong international growth in q4 Maybe a little stronger than we even expected. maybe a little stronger than we even expected I think we're gonna see continued, you know, not 33% growth quarter to quarter necessarily in 2026, but I think we're starting to see, you know, nice pull through of some of the products in Europe, really high demand in our agency markets in Europe and Latin America as well as APAC. i think we're gonna see continued you know not 33% growth quarter to quarter necessarily in 2026 but i think we're starting to see you know nice pull through of some of the products in europe really high demand in our agency markets in europe and latin america as well as apac I would expect to see really strong, you know, growth there as well in 2026. i would expect to see really strong you know growth there as well in 2026

Speaker 3: Correct me if I'm wrong, you also got some EU MDR approvals recently. Correct me if I'm wrong, you also got some EU MDR approvals recently. correct me if i'm wrong you also got some eu mdr approvals recently

Speaker 1: We did. We did. we did

Speaker 3: How does that feed into the sustainable growth trajectory internationally? How does that feed into the sustainable growth trajectory internationally? how does that feed into the sustainable growth trajectory internationally

Speaker 1: I think, you know, people may or may not know, but we have essentially been growing the European business with one arm tied behind our backs, particularly on the scoli side. We launched our scoliosis business in Europe just a few years ago, and that was with really one size of our scoliosis product. We had about half of the product availability. Pretty difficult to convert surgeons when, you know, if you have a smaller patient, we can't offer our small stature size. We got that approval in Q4, and that business was already growing, but I would expect that to continue into the future. Same thing with our products on the trauma and limb deformity side. I would say about half our portfolio hasn't been available due to just the change in regulation from an MDR perspective. I think, you know, people may or may not know, but we have essentially been growing the European business with one arm tied behind our backs, particularly on the scoli side. i think you know people may or may not know but we have essentially been growing the european business with one arm tied behind our backs particularly on the scoli side We launched our scoliosis business in Europe just a few years ago, and that was with really one size of our scoliosis product. we launched our scoliosis business in europe just a few years ago and that was with really one size of our scoliosis product We had about half of the product availability. we had about half of the product availability Pretty difficult to convert surgeons when, you know, if you have a smaller patient, we can't offer our small stature size. pretty difficult to convert surgeons when you know if you have a smaller patient we can't offer our small stature size We got that approval in Q4, and that business was already growing, but I would expect that to continue into the future. we got that approval in q4 and that business was already growing but i would expect that to continue into the future Same thing with our products on the trauma and limb deformity side. same thing with our products on the trauma and limb deformity side I would say about half our portfolio hasn't been available due to just the change in regulation from an MDR perspective. i would say about half our portfolio hasn't been available due to just the change in regulation from an mdr perspective We got those products approved. I like the future in Europe. I think, you know, we would probably expect to see the international business grow a little faster as a result of EU MDR and we have lower share there. Obviously, higher share in the US, but a little lower share in those markets outside of the US. We got those products approved. we got those products approved I like the future in Europe. i like the future in europe I think, you know, we would probably expect to see the international business grow a little faster as a result of EU MDR and we have lower share there. i think you know we would probably expect to see the international business grow a little faster as a result of eu mdr and we have lower share there Obviously, higher share in the US, but a little lower share in those markets outside of the US. obviously higher share in the us but a little lower share in those markets outside of the us

Speaker 3: It's not a fair question 'cause Fred's not here, but I'm gonna ask you to speak to. It's not a fair question 'cause Fred's not here, but I'm gonna ask you to speak to. it's not a fair question 'cause fred's not here but i'm gonna ask you to speak to

Speaker 1: I can say anything now. I can say anything now. i can say anything now

Speaker 3: Yeah. I know. Exactly. The leash is off. If Fred was here, how would he characterize the guide for 2026? I sort of snuck this question in. It feels like sort of a base case... Yeah. yeah I know. i know Exactly. exactly The leash is off. the leash is off If Fred was here, how would he characterize the guide for 2026? if fred was here how would he characterize the guide for 2026 I sort of snuck this question in. i sort of snuck this question in It feels like sort of a base case... it feels like sort of a base case

Speaker 1: Yeah Yeah yeah

Speaker 3: ... as we think about the 2026 outlook. ... as we think about the 2026 outlook. as we think about the 2026 outlook

Speaker 1: Yeah. I think that's. You said it, not me. Yeah, I think that's a nice base case. We recognize there's volatility in terms of timing for 7D. Yeah. yeah I think that's. i think that's You said it, not me. you said it not me Yeah, I think that's a nice base case. yeah i think that's a nice base case We recognize there's volatility in terms of timing for 7D. we recognize there's volatility in terms of timing for 7d We've talked extensively about our work towards improving the AR metrics and some of the working capital metrics in our markets outside of the United States where we're still wholesalers, where we're selling to distributors. You know, in an effort to balance both top line as well as bottom line and free cash flow, we're working really hard on processes inside the business to reduce working capital and drive this business to generate, you know, more cash. We've chosen to moderate certain areas of our business that have historically been more consumers of capital and consumers of cash, and that includes growth in parts of the world like Brazil and Latin America. We've talked extensively about our work towards improving the AR metrics and some of the working capital metrics in our markets outside of the United States where we're still wholesalers, where we're selling to distributors. we've talked extensively about our work towards improving the ar metrics and some of the working capital metrics in our markets outside of the united states where we're still wholesalers where we're selling to distributors You know, in an effort to balance both top line as well as bottom line and free cash flow, we're working really hard on processes inside the business to reduce working capital and drive this business to generate, you know, more cash. you know in an effort to balance both top line as well as bottom line and free cash flow we're working really hard on processes inside the business to reduce working capital and drive this business to generate you know more cash We've chosen to moderate certain areas of our business that have historically been more consumers of capital and consumers of cash, and that includes growth in parts of the world like Brazil and Latin America. we've chosen to moderate certain areas of our business that have historically been more consumers of capital and consumers of cash and that includes growth in parts of the world like brazil and latin america I think our guide is taking into account a balance between, you know, the opportunities we have against what we think is right for the business from a profitability perspective, as well as doing things that ultimately drive this business to generate its own free cash. I think our guide is taking into account a balance between, you know, the opportunities we have against what we think is right for the business from a profitability perspective, as well as doing things that ultimately drive this business to generate its own free cash. i think our guide is taking into account a balance between you know the opportunities we have against what we think is right for the business from a profitability perspective as well as doing things that ultimately drive this business to generate its own free cash

Speaker 3: Great. Great. great

Speaker 2: Yeah Yeah yeah

Speaker 1: is what we're talking about. is what we're talking about. is what we're talking about

Speaker 2: That's right. That's right. that's right

Speaker 3: ... at the end of the day. All right, let's transition, and we'll sort of punch through some of the different franchises. We're very lucky to have Joe with us here, who heads up T&D and OPSB. Is that correct? ... at the end of the day. at the end of the day All right, let's transition, and we'll sort of punch through some of the different franchises. all right let's transition and we'll sort of punch through some of the different franchises We're very lucky to have Joe with us here, who heads up T&D and OPSB. we're very lucky to have joe with us here who heads up t&d and opsb Is that correct? is that correct

Speaker 2: Yeah, that's correct. Yeah, that's correct. yeah that's correct

Speaker 3: That acronym is OrthoPediatrics Specialty Bracing. I got that correct. That acronym is OrthoPediatrics Specialty Bracing. that acronym is orthopediatrics specialty bracing I got that correct. i got that correct

Speaker 2: We love the acronyms. We love the acronyms. we love the acronyms

Speaker 3: Yes. Everyone does. Maybe if we could we start on T&D? It might be helpful just giving the audience if we sort of just give a bit of a background on that end market, what it is, the growth trajectory, competitive intensity. Then we'll sort of laser focus on your positioning there. Yes. yes Everyone does. everyone does Maybe if we could we start on T&D? maybe if we could we start on t&d It might be helpful just giving the audience if we sort of just give a bit of a background on that end market, what it is, the growth trajectory, competitive intensity. it might be helpful just giving the audience if we sort of just give a bit of a background on that end market what it is the growth trajectory competitive intensity Then we'll sort of laser focus on your positioning there. then we'll sort of laser focus on your positioning there

Speaker 2: Yeah. The T&D business, which stands for Trauma and Deformity Correction, or limb deformity, as Dave will put it actually was OP's first product to the market, so it's the roots. It's the beginning of what OrthoPediatrics was. The first system we came out with, system 1 was a Cannulated Screw System. The whole premise strategically behind that was, how do we start to gain more access to these major children's hospitals across the U.S. and eventually across the globe and give our people excuses and reasons to be there? That every time we add a new product system, a new portfolio of products for our surgeons, and that's ultimately been the strategy for the last 10 years, is how do we surround all pediatric orthopedic physicians with everything they need to treat the kids that they treat? Yeah. yeah The T&D business, which stands for Trauma and Deformity Correction, or limb deformity, as Dave will put it actually was OP's first product to the market, so it's the roots. the t&d business which stands for trauma and deformity correction or limb deformity as dave will put it actually was op's first product to the market so it's the roots It's the beginning of what OrthoPediatrics was. it's the beginning of what orthopediatrics was The first system we came out with, system 1 was a Cannulated Screw System. the first system we came out with system 1 was a cannulated screw system The whole premise strategically behind that was, how do we start to gain more access to these major children's hospitals across the U.S. and eventually across the globe and give our people excuses and reasons to be there? the whole premise strategically behind that was how do we start to gain more access to these major children's hospitals across the u.s and eventually across the globe and give our people excuses and reasons to be there That every time we add a new product system, a new portfolio of products for our surgeons, and that's ultimately been the strategy for the last 10 years, is how do we surround all pediatric orthopedic physicians with everything they need to treat the kids that they treat? that every time we add a new product system a new portfolio of products for our surgeons and that's ultimately been the strategy for the last 10 years is how do we surround all pediatric orthopedic physicians with everything they need to treat the kids that they treat Every time we add a new system to that, once we have the access and the right salespeople there, it's pretty easy to see how we grow every time. Now fast-forward, we're over 40 systems in across the marketplace. We're essentially in every major children's hospital, definitely within the United States, and certainly most pediatric centers around the globe with at least one of our systems, if not more. As we chip away at the remaining part of the market that we don't have today, the products that we don't have that they want, you can see how now our access, our people that are there, every time we add a system, it's pretty easy to turn on. You're already approved in the hospital. Every time we add a new system to that, once we have the access and the right salespeople there, it's pretty easy to see how we grow every time. every time we add a new system to that once we have the access and the right salespeople there it's pretty easy to see how we grow every time Now fast-forward, we're over 40 systems in across the marketplace. now fast-forward we're over 40 systems in across the marketplace We're essentially in every major children's hospital, definitely within the United States, and certainly most pediatric centers around the globe with at least one of our systems, if not more. we're essentially in every major children's hospital definitely within the united states and certainly most pediatric centers around the globe with at least one of our systems if not more As we chip away at the remaining part of the market that we don't have today, the products that we don't have that they want, you can see how now our access, our people that are there, every time we add a system, it's pretty easy to turn on. as we chip away at the remaining part of the market that we don't have today the products that we don't have that they want you can see how now our access our people that are there every time we add a system it's pretty easy to turn on You're already approved in the hospital. you're already approved in the hospital

Speaker 3: Same call point, same physician. Same call point, same physician. same call point same physician

Speaker 2: Same call point, now you're just bringing a new novel technology. Basically a system that every surgeon's asked for, now we bring it to the market and almost instantaneously it can be adopted. I think we do have the favor of the competitive landscape in this market has been pretty benign. Not a lot of people are focused at all in pediatrics only. Any of the competitive companies that we see typically have large adult products and franchises, where oftentimes some of their smaller sizes might make their way into a children's hospital. Some of those were okay, high quality products from an adult standpoint, but don't quite fit the bill of what you need from a pediatric side. Same call point, now you're just bringing a new novel technology. same call point now you're just bringing a new novel technology Basically a system that every surgeon's asked for, now we bring it to the market and almost instantaneously it can be adopted. basically a system that every surgeon's asked for now we bring it to the market and almost instantaneously it can be adopted I think we do have the favor of the competitive landscape in this market has been pretty benign. i think we do have the favor of the competitive landscape in this market has been pretty benign Not a lot of people are focused at all in pediatrics only. not a lot of people are focused at all in pediatrics only Any of the competitive companies that we see typically have large adult products and franchises, where oftentimes some of their smaller sizes might make their way into a children's hospital. any of the competitive companies that we see typically have large adult products and franchises where oftentimes some of their smaller sizes might make their way into a children's hospital Some of those were okay, high quality products from an adult standpoint, but don't quite fit the bill of what you need from a pediatric side. some of those were okay high quality products from an adult standpoint but don't quite fit the bill of what you need from a pediatric side I think more interestingly, and the EU MDR that Dave mentioned is a really important component, the requirements for regulatory demands, not only in the U.S. but abroad, have required companies to take a look at their portfolios and say, "Hey, what are we gonna rationalize out of?" Unfortunately, I think the kids, the kids' pediatric products are the first ones to go because they do have a smaller... for each individual product, it's a smaller market space for that one product. The cost to actually keep these products alive from a regulatory perspective is a lot. If you don't have the entire portfolio like a company like OrthoPediatrics has, it really is a struggle to actually just bring one or two products into a niche space already. I think more interestingly, and the EU MDR that Dave mentioned is a really important component, the requirements for regulatory demands, not only in the U.S. but abroad, have required companies to take a look at their portfolios and say, "Hey, what are we gonna rationalize out of?" Unfortunately, I think the kids, the kids' pediatric products are the first ones to go because they do have a smaller... for each individual product, it's a smaller market space for that one product. i think more interestingly and the eu mdr that dave mentioned is a really important component the requirements for regulatory demands not only in the u.s but abroad have required companies to take a look at their portfolios and say "hey what are we gonna rationalize out of?" unfortunately i think the kids the kids' pediatric products are the first ones to go because they do have a smaller for each individual product it's a smaller market space for that one product The cost to actually keep these products alive from a regulatory perspective is a lot. the cost to actually keep these products alive from a regulatory perspective is a lot If you don't have the entire portfolio like a company like OrthoPediatrics has, it really is a struggle to actually just bring one or two products into a niche space already. if you don't have the entire portfolio like a company like orthopediatrics has it really is a struggle to actually just bring one or two products into a niche space already

Speaker 3: Yep. Yep. yep

Speaker 2: Even with the large TAM that we have left, within the U.S. and definitely internationally, we see a lot of our competitors continue to withdraw certain aspects of their portfolios. Also it reaches its way from a channel perspective, where even if you did have a competitive product in the ped space, the channel that was selling it is now focused on other adult related products, which makes it another challenge to be servicing what most reps and people have called our children's hospitals or almost the flyover hospitals... Even with the large TAM that we have left, within the U.S. and definitely internationally, we see a lot of our competitors continue to withdraw certain aspects of their portfolios. even with the large tam that we have left within the u.s and definitely internationally we see a lot of our competitors continue to withdraw certain aspects of their portfolios Also it reaches its way from a channel perspective, where even if you did have a competitive product in the ped space, the channel that was selling it is now focused on other adult related products, which makes it another challenge to be servicing what most reps and people have called our children's hospitals or almost the flyover hospitals... also it reaches its way from a channel perspective where even if you did have a competitive product in the ped space the channel that was selling it is now focused on other adult related products which makes it another challenge to be servicing what most reps and people have called our children's hospitals or almost the flyover hospitals

Speaker 3: Yeah Yeah yeah

Speaker 2: ... where the big adult centers do the vast majority of volumes, and we stick to our focused children's and pediatric centers. ... where the big adult centers do the vast majority of volumes, and we stick to our focused children's and pediatric centers. where the big adult centers do the vast majority of volumes and we stick to our focused children's and pediatric centers

Speaker 3: I have to think you layer on top of that just the dislocation that you're seeing in orthopedics broadly, but certainly in some of the companies that you would be bouncing up against, you know, spinning out businesses or selling to private equity. Just another layer, another tailwind potentially for the business over the next several years. I have to think you layer on top of that just the dislocation that you're seeing in orthopedics broadly, but certainly in some of the companies that you would be bouncing up against, you know, spinning out businesses or selling to private equity. i have to think you layer on top of that just the dislocation that you're seeing in orthopedics broadly but certainly in some of the companies that you would be bouncing up against you know spinning out businesses or selling to private equity Just another layer, another tailwind potentially for the business over the next several years. just another layer another tailwind potentially for the business over the next several years

Speaker 2: Yeah, if you're one of those great organizations, if you're one of those organizations, you double down on your core competency. Yeah, if you're one of those great organizations, if you're one of those organizations, you double down on your core competency. yeah if you're one of those great organizations if you're one of those organizations you double down on your core competency

Speaker 3: Yeah. Yeah. yeah

Speaker 2: You grow what you're good at, and some of these other ancillary things that sat on the fringes, which happens to be where our business lies, you probably take some focus away from there. You grow what you're good at, and some of these other ancillary things that sat on the fringes, which happens to be where our business lies, you probably take some focus away from there. you grow what you're good at and some of these other ancillary things that sat on the fringes which happens to be where our business lies you probably take some focus away from there

Speaker 3: Yeah. Yeah. yeah

Speaker 2: Makes a lot of sense. Makes a lot of sense. makes a lot of sense

Speaker 3: Maybe talk about the new product cadence in T&D, you know, It's always challenging in orthopedics. There's always a lot of different products, always hard to isolate what to focus on. In 2026, some new products coming in particular. Can you give us some flavor of what we should be sensitive to? What are the key growth driving incremental new products coming in 2026? Maybe talk about the new product cadence in T&D, you know, It's always challenging in orthopedics. maybe talk about the new product cadence in t&d you know it's always challenging in orthopedics There's always a lot of different products, always hard to isolate what to focus on. there's always a lot of different products always hard to isolate what to focus on In 2026, some new products coming in particular. in 2026 some new products coming in particular Can you give us some flavor of what we should be sensitive to? can you give us some flavor of what we should be sensitive to What are the key growth driving incremental new products coming in 2026? what are the key growth driving incremental new products coming in 2026

Speaker 2: Yeah. Dave says it well. I don't know when the term came up, super cycle. Yeah. yeah Dave says it well. dave says it well I don't know when the term came up, super cycle. i don't know when the term came up super cycle

Speaker 3: I don't either. I don't either. i don't either

Speaker 2: ... it got put in, it got put into the last report. Super cycle, here we are. Actually it's probably the most accurate way to describe our excitement about what's about to come to the marketplace. Specifically, I try to break the Trauma and Deformity business down into three categories: Plates and Screws, IM nails, and XFIX. Within our Plates and Screws franchise, the 3P Hip System, which is what was launched at a limited basis last year, is now gonna make its way to a full launch this year. When you can add a significant amount of sets there, we see that to provide a bunch of tailwinds from a growth standpoint. ... it got put in, it got put into the last report. it got put in it got put into the last report Super cycle, here we are. super cycle here we are Actually it's probably the most accurate way to describe our excitement about what's about to come to the marketplace. actually it's probably the most accurate way to describe our excitement about what's about to come to the marketplace Specifically, I try to break the Trauma and Deformity business down into three categories: Plates and Screws, IM nails, and XFIX. specifically i try to break the trauma and deformity business down into three categories plates and screws im nails and xfix Within our Plates and Screws franchise, the 3P Hip System, which is what was launched at a limited basis last year, is now gonna make its way to a full launch this year. within our plates and screws franchise the 3p hip system which is what was launched at a limited basis last year is now gonna make its way to a full launch this year When you can add a significant amount of sets there, we see that to provide a bunch of tailwinds from a growth standpoint. when you can add a significant amount of sets there we see that to provide a bunch of tailwinds from a growth standpoint

Speaker 3: The $10 million, I apologize for interrupting, the $10 million in set investments, largely for some of these new products, is that the way to think about it? The $10 million, I apologize for interrupting, the $10 million in set investments, largely for some of these new products, is that the way to think about it? the $10 million i apologize for interrupting the $10 million in set investments largely for some of these new products is that the way to think about it

Speaker 1: I think the way to think about it is that we've worked really hard over the course of the last several years from a development perspective to maximize both the technological profile, so these are kind of very unique. They command high average sales prices as well as minimize the economic footprint, so to speak, that requires to put this inventory on the street. Historically, we would argue that we get about $1 of annualized revenue to have $1 of deployed set. We've been working from an internal development perspective to move that number to double, if not triple. So we think about using $10 million in capital that again, is almost entirely VerteGlide on the scoli side and 3P hip on the T&D side. Those assets just get dramatically higher asset utilization metrics. I think the way to think about it is that we've worked really hard over the course of the last several years from a development perspective to maximize both the technological profile, so these are kind of very unique. i think the way to think about it is that we've worked really hard over the course of the last several years from a development perspective to maximize both the technological profile so these are kind of very unique They command high average sales prices as well as minimize the economic footprint, so to speak, that requires to put this inventory on the street. they command high average sales prices as well as minimize the economic footprint so to speak that requires to put this inventory on the street Historically, we would argue that we get about $1 of annualized revenue to have $1 of deployed set. historically we would argue that we get about $1 of annualized revenue to have $1 of deployed set We've been working from an internal development perspective to move that number to double, if not triple. we've been working from an internal development perspective to move that number to double if not triple So we think about using $10 million in capital that again, is almost entirely VerteGlide on the scoli side and 3P hip on the T&D side. so we think about using $10 million in capital that again is almost entirely verteglide on the scoli side and 3p hip on the t&d side Those assets just get dramatically higher asset utilization metrics. those assets just get dramatically higher asset utilization metrics

Speaker 3: Yes. Yes. yes

Speaker 1: You are gonna see more of that over the course of the super cycle here. You are gonna see more of that over the course of the super cycle here. you are gonna see more of that over the course of the super cycle here

Speaker 3: Okay. Sorry. Apologize. Okay. okay Sorry. sorry Apologize. apologize

Speaker 2: No, no, you're fine. No, no, you're fine. no no you're fine

Speaker 3: You're all right. You're all right. you're all right

Speaker 2: Yeah, the 3P is so part of the Plates and Screws portfolio. We just began what we'd call a massive reenergizing of that entire portfolio. It includes a little bit of an upgrade standpoint, but I think it has much more to do with stuff that we've never done before. Yeah, the 3P is so part of the Plates and Screws portfolio. yeah the 3p is so part of the plates and screws portfolio We just began what we'd call a massive reenergizing of that entire portfolio. we just began what we'd call a massive reenergizing of that entire portfolio It includes a little bit of an upgrade standpoint, but I think it has much more to do with stuff that we've never done before. it includes a little bit of an upgrade standpoint but i think it has much more to do with stuff that we've never done before

Speaker 3: Can you just give us what 3P is? Can you just give us what 3P is? can you just give us what 3p is

Speaker 2: Yeah Yeah yeah

Speaker 3: ... fundamental. ... fundamental. fundamental

Speaker 2: Yeah. 3P is super creative on my part, right? The Pediatric Plating Platform so 3P and the whole premise behind it was basically a massive movement from an internal R&D standpoint to develop almost a system per year for the next three or four years, which we started this journey a few years ago, which is now why we're in the launch phase. The whole key to it was that you weren't just going to launch three, four independent systems that don't have a synergy, don't use similar instrumentation, don't bring the cost of our sets down, don't bring the margin profile up in terms of the unique variations that we can offer. The first system was launched last year with 3P hip. The full launch will occur this year. Yeah. 3P is super creative on my part, right? yeah 3p is super creative on my part right The Pediatric Plating Platform so 3P and the whole premise behind it was basically a massive movement from an internal R&D standpoint to develop almost a system per year for the next three or four years, which we started this journey a few years ago, which is now why we're in the launch phase. the pediatric plating platform so 3p and the whole premise behind it was basically a massive movement from an internal r&d standpoint to develop almost a system per year for the next three or four years which we started this journey a few years ago which is now why we're in the launch phase The whole key to it was that you weren't just going to launch three, four independent systems that don't have a synergy, don't use similar instrumentation, don't bring the cost of our sets down, don't bring the margin profile up in terms of the unique variations that we can offer. the whole key to it was that you weren't just going to launch three four independent systems that don't have a synergy don't use similar instrumentation don't bring the cost of our sets down don't bring the margin profile up in terms of the unique variations that we can offer The first system was launched last year with 3P hip. the first system was launched last year with 3p hip The full launch will occur this year. the full launch will occur this year Soon enough, here in the first half of this year, you'll see the next installment of 3P, which will be the Small-Mini System, which is a little bit more of a utilitarian system, but is almost growth from $1 in terms of something we have. Soon enough, here in the first half of this year, you'll see the next installment of 3P, which will be the Small-Mini System, which is a little bit more of a utilitarian system, but is almost growth from $1 in terms of something we have. soon enough here in the first half of this year you'll see the next installment of 3p which will be the small-mini system which is a little bit more of a utilitarian system but is almost growth from $1 in terms of something we have

Speaker 3: These are all incremental. These are all incremental. these are all incremental

Speaker 2: Yeah. Yeah. yeah

Speaker 3: Largely. Largely. largely

Speaker 2: Yep. Yep. yep

Speaker 3: Yes. Yes. yes

Speaker 2: Correct. That'll go to a limited launch here this year, which then you can expect that there's a compounding effect into 2027, where we'll do the full launch. Still expected to have a meaningful impact in this current year and certainly out years. Then we have a 3P Knee/Femur system. I don't know what we'll call that yet. Certainly development has already started. That'll be the last of the systems that'll be the major installment. Then when you think about future systems, it's all going to use the same instrumentation, the same drill bits, all the same base systems. We'll just be adding implant sets. You can see is it'll be less cost from a deployment standpoint 'cause it will only be implants we would be deploying at that point. Correct. correct That'll go to a limited launch here this year, which then you can expect that there's a compounding effect into 2027, where we'll do the full launch. that'll go to a limited launch here this year which then you can expect that there's a compounding effect into 2027 where we'll do the full launch Still expected to have a meaningful impact in this current year and certainly out years. still expected to have a meaningful impact in this current year and certainly out years Then we have a 3P Knee/F emur system. then we have a 3p knee/f emur system I don't know what we'll call that yet. i don't know what we'll call that yet Certainly development has already started. certainly development has already started That'll be the last of the systems that'll be the major installment. that'll be the last of the systems that'll be the major installment Then when you think about future systems, it's all going to use the same instrumentation, the same drill bits, all the same base systems. then when you think about future systems it's all going to use the same instrumentation the same drill bits all the same base systems We'll just be adding implant sets. we'll just be adding implant sets You can see is it'll be less cost from a deployment standpoint 'cause it will only be implants we would be deploying at that point. you can see is it'll be less cost from a deployment standpoint 'cause it will only be implants we would be deploying at that point

Speaker 3: Similar to that $10 million free cash flow, it's again, more efficient. Similar to that $10 million free cash flow, it's again, more efficient. similar to that $10 million free cash flow it's again more efficient

Speaker 2: Built into it. Absolutely. Correct. Built into it. built into it Absolutely. absolutely Correct. correct

Speaker 3: Talk about so just again, you don't have to give me specifics. You did. I appreciate that on the knee and the femur side. Just how do you think about the cadence of new product introductions, the super cycle, one, two products per year per franchise? What's the goalpost that you set for the team, Dave? Talk about so just again, you don't have to give me specifics. talk about so just again you don't have to give me specifics You did. you did I appreciate that on the knee and the femur side. i appreciate that on the knee and the femur side Just how do you think about the cadence of new product introductions, the super cycle, one, two products per year per franchise? just how do you think about the cadence of new product introductions the super cycle one two products per year per franchise What's the goalpost that you set for the team, Dave? what's the goalpost that you set for the team dave

Speaker 1: I think you're talking at least 1 major system launch annually in the 2 implant side of our business. When you think about OPSB, we expect four or five pretty substantial launches of every year. You're talking about a pretty serious volume of launches. I think, you know, we spent a number of years focused on EU MDR, and I think that maybe in years gone by, there was a bit of a gap between heads down focus on organic new product development. Then a few years ago, when we had done our work, we got back into very aggressive NPD. You're just starting to see literally we're in the batter's box here. I think you're talking at least 1 major system launch annually in the 2 implant side of our business. i think you're talking at least 1 major system launch annually in the 2 implant side of our business When you think about OPSB, we expect four or five pretty substantial launches of every year. when you think about opsb we expect four or five pretty substantial launches of every year You're talking about a pretty serious volume of launches. you're talking about a pretty serious volume of launches I think, you know, we spent a number of years focused on EU MDR, and I think that maybe in years gone by, there was a bit of a gap between heads down focus on organic new product development. i think you know we spent a number of years focused on eu mdr and i think that maybe in years gone by there was a bit of a gap between heads down focus on organic new product development Then a few years ago, when we had done our work, we got back into very aggressive NPD. then a few years ago when we had done our work we got back into very aggressive npd You're just starting to see literally we're in the batter's box here. you're just starting to see literally we're in the batter's box here

Speaker 3: Yeah Yeah yeah

Speaker 1: ... of the first inning of some of these new products. I think those have a compounding effect where it's not just two very substantial products in 2026, but those tend to ramp more aggressively in the second and third year of that product launch. In the second and third year of the product launches that are launching this year, you'll have the first and second years of the next generation. That's why we talk about this cycle. I think what's really compelling about the products is when we were younger, as a, you know, less, you know, more immature as a company, the clinical risks and the technology risks we were willing to take as a small company were much lower... ... of the first inning of some of these new products. of the first inning of some of these new products I think those have a compounding effect where it's not just two very substantial products in 2026, but those tend to ramp more aggressively in the second and third year of that product launch. i think those have a compounding effect where it's not just two very substantial products in 2026 but those tend to ramp more aggressively in the second and third year of that product launch In the second and third year of the product launches that are launching this year, you'll have the first and second years of the next generation. in the second and third year of the product launches that are launching this year you'll have the first and second years of the next generation That's why we talk about this cycle. that's why we talk about this cycle I think what's really compelling about the products is when we were younger, as a, you know, less, you know, more immature as a company, the clinical risks and the technology risks we were willing to take as a small company were much lower... i think what's really compelling about the products is when we were younger as a you know less you know more immature as a company the clinical risks and the technology risks we were willing to take as a small company were much lower

Speaker 3: Small. Yeah. Small. small yeah Yeah. small yeah

Speaker 1: much smaller. Now, I think when surgeons see the products and the work that we put into these, they're high technology, super high value, dramatically more clinically disruptive, and with that commands a higher price. In most cases, these are products that there is no threat of substitute. Our capacity then to walk in and, you know, ensure that we lock down contracts at some of these facilities that pulls through some of our less differentiated products is the strategy here. I think we're again, very early in that process, but I think over the next three years you're gonna see a lot from OP that is very significant. much smaller. much smaller Now, I think when surgeons see the products and the work that we put into these, they're high technology, super high value, dramatically more clinically disruptive, and with that commands a higher price. now i think when surgeons see the products and the work that we put into these they're high technology super high value dramatically more clinically disruptive and with that commands a higher price In most cases, these are products that there is no threat of substitute. in most cases these are products that there is no threat of substitute Our capacity then to walk in and, you know, ensure that we lock down contracts at some of these facilities that pulls through some of our less differentiated products is the strategy here. our capacity then to walk in and you know ensure that we lock down contracts at some of these facilities that pulls through some of our less differentiated products is the strategy here I think we're again, very early in that process, but I think over the next three years you're gonna see a lot from OP that is very significant. i think we're again very early in that process but i think over the next three years you're gonna see a lot from op that is very significant

Speaker 3: What's the learning curve for some of these docs to these complicated systems with complicated procedures, or is it a typical, you know, five to 10 cases and they're facile with it? Or how does it sort of typically, and I assume it might vary from product to product, but in T&D in particular, the 3P system's challenging something new or no, it's bread and butter kind of stuff? What's the learning curve for some of these docs to these complicated systems with complicated procedures, or is it a typical, you know, five to 10 cases and they're facile with it? what's the learning curve for some of these docs to these complicated systems with complicated procedures or is it a typical you know five to 10 cases and they're facile with it Or how does it sort of typically, and I assume it might vary from product to product, but in T&D in particular, the 3P system's challenging something new or no, it's bread and butter kind of stuff? or how does it sort of typically and i assume it might vary from product to product but in t&d in particular the 3p system's challenging something new or no it's bread and butter kind of stuff

Speaker 2: I don't think it's challenging at all for some of these orthopedic surgeons who have experience on an adult side before they even get into pediatrics. There's some new techniques that I think we're bringing to the table. They won't be challenging from a hands skill standpoint, in my opinion, but they offer different ways to go about doing the procedures that we think are more efficient, less time consuming, and less pieces and parts throughout the surgery. Maybe there'll be a little bit of a curiosity in terms of some interesting techniques, but nothing that's difficult. I don't think it's challenging at all for some of these orthopedic surgeons who have experience on an adult side before they even get into pediatrics. i don't think it's challenging at all for some of these orthopedic surgeons who have experience on an adult side before they even get into pediatrics There's some new techniques that I think we're bringing to the table. there's some new techniques that i think we're bringing to the table They won't be challenging from a hands skill standpoint, in my opinion, but they offer different ways to go about doing the procedures that we think are more efficient, less time consuming, and less pieces and parts throughout the surgery. they won't be challenging from a hands skill standpoint in my opinion but they offer different ways to go about doing the procedures that we think are more efficient less time consuming and less pieces and parts throughout the surgery Maybe there'll be a little bit of a curiosity in terms of some interesting techniques, but nothing that's difficult. maybe there'll be a little bit of a curiosity in terms of some interesting techniques but nothing that's difficult

Speaker 3: Okay, let's now transition. We'll talk about the bracing business. You mentioned it, so it was a good segue just a couple minutes ago. I think maybe similar framework. What is it? I think importantly, how does it fit into sort of the ecosystem that is OrthoPediatrics? Maybe immediately not apparent why there are synergies, but there clearly are. Maybe help us understand. Okay, let's now transition. okay let's now transition We'll talk about the bracing business. we'll talk about the bracing business You mentioned it, so it was a good segue just a couple minutes ago. you mentioned it so it was a good segue just a couple minutes ago I think maybe similar framework. i think maybe similar framework What is it? what is it I think importantly, how does it fit into sort of the ecosystem that is OrthoPediatrics? i think importantly how does it fit into sort of the ecosystem that is orthopediatrics Maybe immediately not apparent why there are synergies, but there clearly are. maybe immediately not apparent why there are synergies but there clearly are Maybe help us understand. maybe help us understand

Speaker 2: Sure, yeah. The specialty bracing business is essentially us providing bracing care, which can be done in an O&P or orthotics and prosthetics service model or just an independent product that we can offer all to treat pediatrics and adolescents. When we strategized to get into this space, we did originally called it an adjacency, but it's really not an adjacency. It's pretty tight within our wheelhouse because it's the same customer base, the same surgeon or physician who does our surgical case earlier in the day, goes to a clinic in the afternoon and can prescribe bracing in that same front. Sure, yeah. sure yeah The specialty bracing business is essentially us providing bracing care, which can be done in an O&P or orthotics and prosthetics service model or just an independent product that we can offer all to treat pediatrics and adolescents. the specialty bracing business is essentially us providing bracing care which can be done in an o&p or orthotics and prosthetics service model or just an independent product that we can offer all to treat pediatrics and adolescents When we strategized to get into this space, we did originally called it an adjacency, but it's really not an adjacency. when we strategized to get into this space we did originally called it an adjacency but it's really not an adjacency It's pretty tight within our wheelhouse because it's the same customer base, the same surgeon or physician who does our surgical case earlier in the day, goes to a clinic in the afternoon and can prescribe bracing in that same front. it's pretty tight within our wheelhouse because it's the same customer base the same surgeon or physician who does our surgical case earlier in the day goes to a clinic in the afternoon and can prescribe bracing in that same front

Speaker 3: It's the front end of that sort of patient journey before there's some sort of invasive procedures. It's the front end of that sort of patient journey before there's some sort of invasive procedures. it's the front end of that sort of patient journey before there's some sort of invasive procedures

Speaker 2: It's actually both. It's actually both. it's actually both

Speaker 3: Okay. The back end as well. Okay. okay The back end as well. the back end as well

Speaker 2: The front end and the back end. The front end and the back end. the front end and the back end

Speaker 3: Yeah. Yeah. yeah

Speaker 2: I think for us, as we looked at it, we knew number one, from a development standpoint, because it's majority Class I devices, it'd be a much faster development cycle. Two is we understood that from a capital standpoint, we don't need to deploy inventory assets to actually get to this market. The ability to preserve cash, but also still have revenue growth was very important. The customer base, the same. It's the same hospital, same places that all. When you realize that these pediatric orthopedic physicians, surgeons, 80% of what they do on a daily basis actually involves not taking a child into an operating room. I think for us, as we looked at it, we knew number one, from a development standpoint, because it's majority Class I devices, it'd be a much faster development cycle. i think for us as we looked at it we knew number one from a development standpoint because it's majority class i devices it'd be a much faster development cycle Two is we understood that from a capital standpoint, we don't need to deploy inventory assets to actually get to this market. two is we understood that from a capital standpoint we don't need to deploy inventory assets to actually get to this market The ability to preserve cash, but also still have revenue growth was very important. the ability to preserve cash but also still have revenue growth was very important The customer base, the same. the customer base the same It's the same hospital, same places that all. it's the same hospital same places that all When you realize that these pediatric orthopedic physicians, surgeons, 80% of what they do on a daily basis actually involves not taking a child into an operating room. when you realize that these pediatric orthopedic physicians surgeons 80% of what they do on a daily basis actually involves not taking a child into an operating room

Speaker 3: Right. Right. right

Speaker 2: The highest volumes of what we can have access to, ultimately, I think we all would wish that not every child needs to have surgery, is there ways to treat them. Really it was us doubling down on our dedication to helping kids with musculoskeletal conditions. If you're not going to be in that 80% space, then you're missing a large portion of the market. The highest volumes of what we can have access to, ultimately, I think we all would wish that not every child needs to have surgery, is there ways to treat them. the highest volumes of what we can have access to ultimately i think we all would wish that not every child needs to have surgery is there ways to treat them Really it was us doubling down on our dedication to helping kids with musculoskeletal conditions. really it was us doubling down on our dedication to helping kids with musculoskeletal conditions If you're not going to be in that 80% space, then you're missing a large portion of the market. if you're not going to be in that 80% space then you're missing a large portion of the market

Speaker 3: Yeah. In some ways, you're surrounding the patient, you're surrounding the physician, you're making yourself indispensable. Yeah. yeah In some ways, you're surrounding the patient, you're surrounding the physician, you're making yourself indispensable. in some ways you're surrounding the patient you're surrounding the physician you're making yourself indispensable

Speaker 2: The hospital. The hospital. the hospital

Speaker 3: ...in some respects. At the hospital as well. Can you put a little finer point on how to think about the addressable market opportunity for bracing specifically? I don't know, should we think about it relative, more of a, sort of a clinic number relative to the number of children hospitals out there in terms of, you know, how this ramps? Just any way to frame the opportunity. ...in some respects. ...in some respects At the hospital as well. at the hospital as well Can you put a little finer point on how to think about the addressable market opportunity for bracing specifically? can you put a little finer point on how to think about the addressable market opportunity for bracing specifically I don't know, should we think about it relative, more of a, sort of a clinic number relative to the number of children hospitals out there in terms of, you know, how this ramps? i don't know should we think about it relative more of a sort of a clinic number relative to the number of children hospitals out there in terms of you know how this ramps Just any way to frame the opportunity. just any way to frame the opportunity

Speaker 2: Yeah. We estimate it to be about a $500 million TAM within our focused children's hospital market segment. Yeah. yeah We estimate it to be about a $500 million TAM within our focused children's hospital market segment. we estimate it to be about a $500 million tam within our focused children's hospital market segment

Speaker 3: Within that $300. Within that $300. within that $300

Speaker 2: Mm-hmm. Mm-hmm. mm-hmm

Speaker 3: Okay. Okay. okay

Speaker 2: Yep. Yep. yep

Speaker 3: Where are we today, do you think? Where are we today, do you think? where are we today do you think

Speaker 2: What percentage of that? What percentage of that? what percentage of that

Speaker 3: Yeah, if the market is addressable of $500 million today, the run rate is $50 million. Are we 10% penetrated, 20% penetrated? Yeah, if the market is addressable of $500 million today, the run rate is $50 million. yeah if the market is addressable of $500 million today the run rate is $50 million Are we 10% penetrated, 20% penetrated? are we 10% penetrated 20% penetrated

Speaker 2: Yeah, I wish I had a great number for that as we try to. Yeah, I wish I had a great number for that as we try to. yeah i wish i had a great number for that as we try to

Speaker 3: We got a long way to go. We got a long way to go. we got a long way to go

Speaker 2: That's what I was gonna get to, is that we're barely getting started. If you figure there's 80 target markets that we have talked about, 80 geographical, you know, metropolitan cities that we know there's a very busy OrthoPediatrics implant children's hospital today. When we started on this journey, we were in nine of those. As Dave mentioned, we got to six of those here this last year. Now we're getting closer to the 20 target markets. We have 80 total, it's just a matter of time that we're gonna take it from the 20 to get to these 80 markets. It's not just for O&P care from a clinic perspective, it's also from the product perspective. That's what I was gonna get to, is that we're barely getting started. that's what i was gonna get to is that we're barely getting started If you figure there's 80 target markets that we have talked about, 80 geographical, you know, metropolitan cities that we know there's a very busy OrthoPediatrics implant children's hospital today. if you figure there's 80 target markets that we have talked about 80 geographical you know metropolitan cities that we know there's a very busy orthopediatrics implant children's hospital today When we started on this journey, we were in nine of those. when we started on this journey we were in nine of those As Dave mentioned, we got to six of those here this last year. as dave mentioned we got to six of those here this last year Now we're getting closer to the 20 target markets. now we're getting closer to the 20 target markets We have 80 total, it's just a matter of time that we're gonna take it from the 20 to get to these 80 markets. we have 80 total it's just a matter of time that we're gonna take it from the 20 to get to these 80 markets It's not just for O&P care from a clinic perspective, it's also from the product perspective. it's not just for o&p care from a clinic perspective it's also from the product perspective

Speaker 3: Okay. Interesting. Okay. okay Interesting. interesting

Speaker 1: Big, big runway here, I think, for that business. Big, big runway here, I think, for that business. big big runway here i think for that business

Speaker 3: When I think about the growth here, it's a lot of greenfield opportunity or white space opportunity, however you wanna reframe it, versus sort of same store sales. That's the way to think about it. When I think about the growth here, it's a lot of greenfield opportunity or white space opportunity, however you wanna reframe it, versus sort of same store sales. when i think about the growth here it's a lot of greenfield opportunity or white space opportunity however you wanna reframe it versus sort of same store sales That's the way to think about it. that's the way to think about it

Speaker 2: 100%. We're still very happy with how we can grow our same store sales just by connecting the OrthoPediatrics relationship to what was historically the Boston O&P relationship. That's great, the way to grow and the bigger piece of growth have to do with greenfields. 100%. 100% We're still very happy with how we can grow our same store sales just by connecting the OrthoPediatrics relationship to what was historically the Boston O&P relationship. we're still very happy with how we can grow our same store sales just by connecting the orthopediatrics relationship to what was historically the boston o&p relationship That's great, the way to grow and the bigger piece of growth have to do with greenfields. that's great the way to grow and the bigger piece of growth have to do with greenfields

Speaker 3: Have you seen, I know it's early days, but pull through of the portfolio more so in those particular accounts that have, you know, an attached bracing, clinic? Have you seen, I know it's early days, but pull through of the portfolio more so in those particular accounts that have, you know, an attached bracing, clinic? have you seen i know it's early days but pull through of the portfolio more so in those particular accounts that have you know an attached bracing clinic

Speaker 2: We have found that all the hospitals that have a clinic on-site or close to it, the approach from the administration of the hospital has been to ask us, "How do we package all of what OP has to offer so that it's not just clinic or it's not just Trauma and Deformity? If we don't have the Scoliosis business yet, is there a way for us to partner?" It's been extremely invigorating for us to take on these challenges to say, "Well, you've had these contracts in the past. We are the only one that can actually offer this entire portfolio. What can we do this a little more unique? We have found that all the hospitals that have a clinic on-site or close to it, the approach from the administration of the hospital has been to ask us, "How do we package all of what OP has to offer so that it's not just clinic or it's not just Trauma and Deformity? we have found that all the hospitals that have a clinic on-site or close to it the approach from the administration of the hospital has been to ask us "how do we package all of what op has to offer so that it's not just clinic or it's not just trauma and deformity If we don't have the Scoliosis business yet, is there a way for us to partner?" It's been extremely invigorating for us to take on these challenges to say, "Well, you've had these contracts in the past. if we don't have the scoliosis business yet is there a way for us to partner?" it's been extremely invigorating for us to take on these challenges to say "well you've had these contracts in the past We are the only one that can actually offer this entire portfolio. we are the only one that can actually offer this entire portfolio What can we do this a little more unique? what can we do this a little more unique

Speaker 3: You're digging a deeper and deeper moat, even though there's competition. You're digging a deeper and deeper moat, even though there's competition. you're digging a deeper and deeper moat even though there's competition

Speaker 2: Correct. Yep. Correct. correct Yep. yep

Speaker 3: I've just been curious, just from the profitability standpoint, how it compares, relative to, let's say, corporate, OrthoPediatrics. I've just been curious, just from the profitability standpoint, how it compares, relative to, let's say, corporate, OrthoPediatrics. i've just been curious just from the profitability standpoint how it compares relative to let's say corporate orthopediatrics

Speaker 1: I think from a gross margin perspective, the OPSB business has a slightly lower gross margin, although not that much, and it has dramatically lower selling costs. As we think about contribution margin, OPSB is probably a little higher contribution right now than even the legacy implant business, and obviously, there's not capital deployment. I think from a gross margin perspective, the OPSB business has a slightly lower gross margin, although not that much, and it has dramatically lower selling costs. i think from a gross margin perspective the opsb business has a slightly lower gross margin although not that much and it has dramatically lower selling costs As we think about contribution margin, OPSB is probably a little higher contribution right now than even the legacy implant business, and obviously, there's not capital deployment. as we think about contribution margin opsb is probably a little higher contribution right now than even the legacy implant business and obviously there's not capital deployment

Speaker 3: Right. Right. right

Speaker 1: I think at the time when capital is expensive, you know, growing through the OPSB model is, I think, quite smart, and obviously, you've heard about the synergies that it's driving with the implant side of the business. I think our thesis is very well intact here in terms of what this could do, not just for the top line over the course of time, but you know, at maturity, what this can generate from a bottom line perspective. I think at the time when capital is expensive, you know, growing through the OPSB model is, I think, quite smart, and obviously, you've heard about the synergies that it's driving with the implant side of the business. i think at the time when capital is expensive you know growing through the opsb model is i think quite smart and obviously you've heard about the synergies that it's driving with the implant side of the business I think our thesis is very well intact here in terms of what this could do, not just for the top line over the course of time, but you know, at maturity, what this can generate from a bottom line perspective. i think our thesis is very well intact here in terms of what this could do not just for the top line over the course of time but you know at maturity what this can generate from a bottom line perspective

Speaker 3: How are you governing, you know, sort of measuring how, you know, quickly you get after these opportunities? How much of it is, you know, we wanna grow, we wanna grow profitably? How much is it, you know, got a long opportunity, let's leave some meat on the bone each year? How are you thinking about sort of selecting and sort of how aggressively you go after this, you know, highly underpenetrated opportunity? How are you governing, you know, sort of measuring how, you know, quickly you get after these opportunities? how are you governing you know sort of measuring how you know quickly you get after these opportunities How much of it is, you know, we wanna grow, we wanna grow profitably? how much of it is you know we wanna grow we wanna grow profitably How much is it, you know, got a long opportunity, let's leave some meat on the bone each year? how much is it you know got a long opportunity let's leave some meat on the bone each year How are you thinking about sort of selecting and sort of how aggressively you go after this, you know, highly underpenetrated opportunity? how are you thinking about sort of selecting and sort of how aggressively you go after this you know highly underpenetrated opportunity

Speaker 1: Yeah, I think we're being pretty aggressive on the OPSB side. We're not going to try to be everything to everybody here. I think that we could certainly potentially grow faster. We are not leveraging the profitability of the OPSB. We're generally leveraging the implant profitability to feed the growth engine that is OPSB right now. We're not running that component of our business for, you know, the positive free cash and for profitability with the kind of growth rate. Yeah, I think we're being pretty aggressive on the OPSB side. yeah i think we're being pretty aggressive on the opsb side We're not going to try to be everything to everybody here. we're not going to try to be everything to everybody here I think that we could certainly potentially grow faster. i think that we could certainly potentially grow faster We are not leveraging the profitability of the OPSB. we are not leveraging the profitability of the opsb We're generally leveraging the implant profitability to feed the growth engine that is OPSB right now. we're generally leveraging the implant profitability to feed the growth engine that is opsb right now We're not running that component of our business for, you know, the positive free cash and for profitability with the kind of growth rate. we're not running that component of our business for you know the positive free cash and for profitability with the kind of growth rate

Speaker 3: Yeah. Yeah. yeah

Speaker 1: You know, I think that you could expect this business to grow north of 20% for a long time. I mean, it's a, it's a lot of blue ocean in front of us here. You know, I think that you could expect this business to grow north of 20% for a long time. you know i think that you could expect this business to grow north of 20% for a long time I mean, it's a, it's a lot of blue ocean in front of us here. i mean it's a it's a lot of blue ocean in front of us here

Speaker 3: Okay. That was my next question, so I appreciate you checking that off the list. Let's now talk about Scoliosis. Okay. okay That was my next question, so I appreciate you checking that off the list. that was my next question so i appreciate you checking that off the list Let's now talk about Scoliosis. let's now talk about scoliosis

Speaker 1: Yeah. Yeah. yeah

Speaker 3: You mentioned VerteGlide. Maybe though similar framework, the Scoliosis opportunity, competitive positioning... You mentioned VerteGlide. you mentioned verteglide Maybe though similar framework, the Scoliosis opportunity, competitive positioning... maybe though similar framework the scoliosis opportunity competitive positioning

Speaker 1: Yeah Yeah yeah

Speaker 3: ... VerteGlide would be a nice, sort of foray into what's new. ... VerteGlide would be a nice, sort of foray into what's new. verteglide would be a nice sort of foray into what's new

Speaker 1: Yeah Yeah yeah

Speaker 3: What's gonna drive growth over the next couple of years. What's gonna drive growth over the next couple of years. what's gonna drive growth over the next couple of years

Speaker 1: Scoliosis is our, you know, the smaller business obviously than T&D. It represents about 25% of global revenue. A pediatric orthopedic surgeon that does T&D also generally does scoliosis, so we have that, you know, nice relationship. We've been in the market for about 14 years. We might have less than 20% market share inside Children's Hospital. Scoliosis is our, you know, the smaller business obviously than T&D. scoliosis is our you know the smaller business obviously than t&d It represents about 25% of global revenue. it represents about 25% of global revenue A pediatric orthopedic surgeon that does T&D also generally does scoliosis, so we have that, you know, nice relationship. a pediatric orthopedic surgeon that does t&d also generally does scoliosis so we have that you know nice relationship We've been in the market for about 14 years. we've been in the market for about 14 years We might have less than 20% market share inside Children's Hospital. we might have less than 20% market share inside children's hospital

Speaker 3: Your competitors there are? Your competitors there are? your competitors there are

Speaker 1: Generally Medtronic, DePuy, primary competitors, and there's a long history of, you know, legacy products that have been used from those companies for 30 years. Generally Medtronic, DePuy, primary competitors, and there's a long history of, you know, legacy products that have been used from those companies for 30 years. generally medtronic depuy primary competitors and there's a long history of you know legacy products that have been used from those companies for 30 years

Speaker 3: Neither of them are investing. Neither of them are investing. neither of them are investing

Speaker 1: Right. Right. right

Speaker 3: It's the same sort of messaging. It's the same sort of messaging. it's the same sort of messaging

Speaker 1: Right. Right. right

Speaker 3: Yep. Yep. yep

Speaker 1: We continue to take share within our fusion business. I would say the fusion market is slightly less differentiated. There's a lot of good companies with good systems that are applicable in pedes, maybe not designed for pedes, but applicable. But we've chosen to invest in early onset scoliosis. We think there's a really nice probably $50 million-$80 million kind of blue ocean market for us here, where there's very limited technology, extremely limited technology development. No one's investing here. And these patients are, frankly, these are very difficult patients to treat, and they're treated by some of the most elite pediatric orthopedic surgeons in the world. We continue to take share within our fusion business. we continue to take share within our fusion business I would say the fusion market is slightly less differentiated. i would say the fusion market is slightly less differentiated There's a lot of good companies with good systems that are applicable in pedes, maybe not designed for pedes, but applicable. there's a lot of good companies with good systems that are applicable in pedes maybe not designed for pedes but applicable But we've chosen to invest in early onset scoliosis. but we've chosen to invest in early onset scoliosis We think there's a really nice probably $50 million-$80 million kind of blue ocean market for us here, where there's very limited technology, extremely limited technology development. we think there's a really nice probably $50 million-$80 million kind of blue ocean market for us here where there's very limited technology extremely limited technology development No one's investing here. no one's investing here And these patients are, frankly, these are very difficult patients to treat, and they're treated by some of the most elite pediatric orthopedic surgeons in the world. and these patients are frankly these are very difficult patients to treat and they're treated by some of the most elite pediatric orthopedic surgeons in the world You know, where certain larger accounts, we may have not been taken as seriously as a scoliosis provider, even though we are very seriously taken on the T&D side, to be able to generate kind of one of the kind products that meet massive clinical needs for the pediatric orthopedic surgeons is placing us front and center in some accounts that, you know, I don't think have taken us as seriously maybe as some of the larger players like Medtronic. You know, where certain larger accounts, we may have not been taken as seriously as a scoliosis provider, even though we are very seriously taken on the T&D side, to be able to generate kind of one of the kind products that meet massive clinical needs for the pediatric orthopedic surgeons is placing us front and center in some accounts that, you know, I don't think have taken us as seriously maybe as some of the larger players like Medtronic. you know where certain larger accounts we may have not been taken as seriously as a scoliosis provider even though we are very seriously taken on the t&d side to be able to generate kind of one of the kind products that meet massive clinical needs for the pediatric orthopedic surgeons is placing us front and center in some accounts that you know i don't think have taken us as seriously maybe as some of the larger players like medtronic

Speaker 3: Is that what VerteGlide is? Is that sort of that workhorse product? Is that that type of product to get you there? Is that what VerteGlide is? is that what verteglide is Is that sort of that workhorse product? is that sort of that workhorse product Is that that type of product to get you there? is that that type of product to get you there

Speaker 1: I think this as well as, you know, our RESPONSE Rib and Pelvic and the LE device that's on its way. I think when you think about that complete portfolio, we have the most comprehensive early onset scoliosis portfolio ever. It demands a serious look, and I think we are definitely getting a serious look by, you know, some of the top children's hospitals on this front. I think this as well as, you know, our RESPONSE Rib and Pelvic and the LE device that's on its way. i think this as well as you know our response rib and pelvic and the le device that's on its way I think when you think about that complete portfolio, we have the most comprehensive early onset scoliosis portfolio ever. i think when you think about that complete portfolio we have the most comprehensive early onset scoliosis portfolio ever It demands a serious look, and I think we are definitely getting a serious look by, you know, some of the top children's hospitals on this front. it demands a serious look and i think we are definitely getting a serious look by you know some of the top children's hospitals on this front

Speaker 3: That's great. In these last three minutes, I wanna, you know, take a step back. This is a story that we know, we talk to people as much as we can about. There, you know, there seems to be misunderstanding, you know, gets lumped into the broader... You know, we're simple-minded folks, analysts, and everything. We paint with a broad brush because it's just easier that way. You know, it's either, "Oh, no, that's an orthopedics company," or, "Oh, no, that's a spine company." Maybe help us frame why you're not just a- That's great. that's great In these last three minutes, I wanna, you know, take a step back. in these last three minutes i wanna you know take a step back This is a story that we know, we talk to people as much as we can about. this is a story that we know we talk to people as much as we can about There, you know, there seems to be misunderstanding, you know, gets lumped into the broader... there you know there seems to be misunderstanding you know gets lumped into the broader You know, we're simple-minded folks, analysts, and everything. you know we're simple-minded folks analysts and everything We paint with a broad brush because it's just easier that way. we paint with a broad brush because it's just easier that way You know, it's either, "Oh, no, that's an orthopedics company," or, "Oh, no, that's a spine company." Maybe help us frame why you're not just a- you know it's either "oh no that's an orthopedics company," or "oh no that's a spine company." maybe help us frame why you're not just a-

Speaker 1: Yeah Yeah yeah

Speaker 3: ... another orthopedic. We've sort of alluded it, to it, I think, in this conversation. Maybe put a finer point on what makes kids, a differentiated story with a long runway for growth and also improving profitability. ... another orthopedic. another orthopedic We've sort of alluded it, to it, I think, in this conversation. we've sort of alluded it to it i think in this conversation Maybe put a finer point on what makes kids, a differentiated story with a long runway for growth and also improving profitability. maybe put a finer point on what makes kids a differentiated story with a long runway for growth and also improving profitability

Speaker 1: I think this is a lot of times a misunderstood notion by investors and even some and analysts over years to that are now really kind of uncovering our story that, you know, we're not a pure play orthopedic company that's competing in all these different verticals, total joint reconstruction, foot and ankle, whatever. We're not a spine company. I mean, only 25% of our revenue is spine, and we truly only have a spine product for a single or a single indication in pediatric spine deformity correction. I think OP is a pediatric company, and we're kind of an N of one in pediatric orthopedics. We've invested a lot to build the most powerful brand and commercial footprint in pediatric orthopedics globally, and we're leveraging that brand. I think this is a lot of times a misunderstood notion by investors and even some and analysts over years to that are now really kind of uncovering our story that, you know, we're not a pure play orthopedic company that's competing in all these different verticals, total joint reconstruction, foot and ankle, whatever. i think this is a lot of times a misunderstood notion by investors and even some and analysts over years to that are now really kind of uncovering our story that you know we're not a pure play orthopedic company that's competing in all these different verticals total joint reconstruction foot and ankle whatever We're not a spine company. we're not a spine company I mean, only 25% of our revenue is spine, and we truly only have a spine product for a single or a single indication in pediatric spine deformity correction. i mean only 25% of our revenue is spine and we truly only have a spine product for a single or a single indication in pediatric spine deformity correction I think OP is a pediatric company, and we're kind of an N of one in pediatric orthopedics. i think op is a pediatric company and we're kind of an n of one in pediatric orthopedics We've invested a lot to build the most powerful brand and commercial footprint in pediatric orthopedics globally, and we're leveraging that brand. we've invested a lot to build the most powerful brand and commercial footprint in pediatric orthopedics globally and we're leveraging that brand We have extremely long, product development and sales cycles for those products, long tails of growth because we're not in this constant bare knuckle struggle against competitors where the threat of substitute happens so very rapidly. Every three years, you've got to develop the next generation of product. That's just not what the pediatric orthopedic marketplace looks like. We're balancing deployment of resources against, you know, how fast we wanna grow the top line, but not encountering entrenched competitors there. I think that makes us very unique. I think it would be very difficult to supplant us. I think, you know, pediatric orthopedic surgeons really require OrthoPediatrics and some of our products that are so unique that it would be difficult to do some of these surgeries. We have extremely long, product development and sales cycles for those products, long tails of growth because we're not in this constant bare knuckle struggle against competitors where the threat of substitute happens so very rapidly. we have extremely long product development and sales cycles for those products long tails of growth because we're not in this constant bare knuckle struggle against competitors where the threat of substitute happens so very rapidly Every three years, you've got to develop the next generation of product. every three years you've got to develop the next generation of product That's just not what the pediatric orthopedic marketplace looks like. that's just not what the pediatric orthopedic marketplace looks like We're balancing deployment of resources against, you know, how fast we wanna grow the top line, but not encountering entrenched competitors there. we're balancing deployment of resources against you know how fast we wanna grow the top line but not encountering entrenched competitors there I think that makes us very unique. i think that makes us very unique I think it would be very difficult to supplant us. i think it would be very difficult to supplant us I think, you know, pediatric orthopedic surgeons really require OrthoPediatrics and some of our products that are so unique that it would be difficult to do some of these surgeries. i think you know pediatric orthopedic surgeons really require orthopediatrics and some of our products that are so unique that it would be difficult to do some of these surgeries I think that's a very unique market position, and I'm not sure that you've seen that in other ortho names, much less even in other MedTech names. I think that's kind of misunderstood by the marketplace. We often get compared to small cap spine or small cap foot and ankle. Those companies are great companies, but that's just not what we do. I think that's a very unique market position, and I'm not sure that you've seen that in other ortho names, much less even in other MedTech names. i think that's a very unique market position and i'm not sure that you've seen that in other ortho names much less even in other medtech names I think that's kind of misunderstood by the marketplace. i think that's kind of misunderstood by the marketplace We often get compared to small cap spine or small cap foot and ankle. we often get compared to small cap spine or small cap foot and ankle Those companies are great companies, but that's just not what we do. those companies are great companies but that's just not what we do

Speaker 3: Yeah. Well, I told you we're simple-minded. We like to peg everything. All right. I think we'll wrap it there. Really appreciate. Thank you so much for making the trip. Great to meet you, Joe. Thank you so much everyone for joining us. Really appreciate it. Thanks so much. Yeah. yeah Well, I told you we're simple-minded. well i told you we're simple-minded We like to peg everything. we like to peg everything All right. all right I think we'll wrap it there. i think we'll wrap it there Really appreciate. really appreciate Thank you so much for making the trip. thank you so much for making the trip Great to meet you, Joe. great to meet you joe Thank you so much everyone for joining us. thank you so much everyone for joining us Really appreciate it. really appreciate it Thanks so much. thanks so much

Speaker 1: Thanks, Matt. Thanks, Matt. thanks matt

Speaker 3: Thanks. Thanks. thanks

Speaker 1: This was great. Appreciate it. This was great. this was great Appreciate it. appreciate it