ORTHOPEDIATRICS CORP — Call Transcript 2026

Good morning. Thanks for joining us again at the 25th Annual Needham Healthcare Conference. I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research team at Needham & Company. I'm pleased to introduce OrthoPediatrics. Presenting from the company today, we have President and CEO, David Bailey, and CFO and COO, Fred Hite. Instead of a standard presentation, we are going to do a Q&A or fireside session. If you do have questions you would like to ask, you can submit them electronically through the conference website, or feel free to email them to me at [email protected] and I'll do my best to fit them in. Again, thanks for joining us, David and Fred. I'm just going to go straight into the questions here. Given all the headlines, I want to start with some macro topics. Can you start by maybe commenting on your exposure to oil prices? I'd assume it's mainly through freight, but I don't know if there's any kind of raw materials impact or anything like that. Yeah. First, Mike, thanks for having us. We appreciate Needham and attending this conference, so thank you for that. Related to macro oil prices, you are correct. So freight, a small impact there on the freight side. We haven't seen it just yet, but I'm sure it'll be coming. And very, very little impact on the material cost of goods sold. So most of our products are metal, instruments, implants, cases, and trays. A little bit on the bracing side, but a very, very small portion of our overall cost of goods sold. So we're not anticipating that having any significant impact, and we'll manage through the freight as it comes. Hopefully, it won't be lasting long, and we'll get back to normal. Okay. You're not concerned about any sort of knock-on effects of the war, like shortages of other materials like metals or anything like that, or just generalized inflation affecting the business? No. We continue to monitor it like everybody else, obviously, but at this point, we don't see that having any negative impact on our business. Okay. All right. Well, with that out of the way, I want to move on to talk more about the specific businesses here. Starting with OPSB, I was wondering if you could give us an update on the clinics. How many clinics have you opened since the Boston OP acquisition, and what's your target for the rest of this year in terms of the number you're planning to open? Yeah. Thanks, Mike. If you remember correctly, when we acquired Boston a couple of years ago, they had about 25 clinics, primarily clustered in the Northeast around Boston, Philadelphia, that area. At this stage, we have north of 45 clinics. That number changes sometimes. Sometimes we're consolidating smaller clinics into bigger clinics. Sometimes we're actually setting up satellite clinics in locations where we already have a bigger clinic. I'm not sure that the specific number is as relevant as the number of territories. If you remember a few years ago, we talked about scaling into what we view as 80 territories in the United States that would encompass about all 300 children's hospitals. We expect by the end of this year to be in 27 of those at minimum, which was our target a few years ago. I think we're on pace, if not a little bit ahead of pace in terms of clinic expansion. We continue to see the demand for locations probably is a little higher than we have the capacity to open them. We're trying to be judicious in terms of how many we open simultaneously, but it's all been very positive so far. We continue to see that business grow really nicely, and I think we're probably a little ahead of schedule from where we expected in terms of revenue growth and profitability for that business. Okay. Got it. Can you talk about the sales team in that business? Is it kind of based on the territories, as you mentioned? Is it one per territory or something like that? What are your plans to kind of grow that group? Yeah. We generally are scaling our sales team as we scale clinics. It's a small group right now. I think it's north of 10 or so at this stage. You can imagine that we have more than 200 commercial people here in the United States selling the implant products. Mike, that involves staying in the operating room. Being the service component of that is very heavy. It involves a lot more people than we'll require to ultimately scale on the OPSB side. As we continue to grow, we continue to add a few people. You could imagine our aspiration to cover all 300 children's hospitals. That'll be a decent sized sales team eventually. It certainly isn't something that we're obligated to invest in before we have clinics in those particular regions. Yeah. Okay. That makes sense. How are you sort of prioritizing the areas of the country or the children's hospitals where you're opening your clinics, I guess the territories as you mentioned? Yeah. How do you decide where to go next? Yeah, you can imagine locations where we have incredibly strong commercial relationships already on the implant side are natural fits for us. We serve all 300 children's hospitals, but the places where we are maybe more deeply penetrated, I think, is generally a good barometer for where we're going to see the fastest uptick. I also think that we've learned some lessons over the course of the last few years in that if we can get clinics inside the children's hospital versus starting with a satellite and then getting one inside the children's hospital, then that's normally a benefit to us in terms of revenue and profitability. We tend to prioritize these opportunities where there's a hospital that's asking as well as the physicians, they're going to have space available to us. In some cases, we're even slowing down a particular region because we could set up a clinic maybe six months earlier, but if we wait six months, we'll have kind of a choice location inside a children's hospital. I think it makes more sense for us to wait in those instances and have our physical location directly in the children's hospitals. We've seen the economics of that work really well for us. The uptick in revenue works really well for us. Those are ways that we're prioritizing where we select locations. Yeah. Okay. That makes sense. I think in the Investor Day, maybe you talked about the return on investment in new clinics. I think it was pretty rapid payback there. What are you seeing in the real world compared to what you expected in terms of the investment required and the payback period for those new clinics that you're opening? Yeah, I think it's very consistent with what we thought. We see a payback faster on these clinics that are, again, inside children's hospitals. Certainly, when we do an acqui-hire, some of those acqui-hires, they're certainly almost all profitable from the very beginning, so it impacts top line and impacts profitability. The greenfields, while less of an investment, take a little bit longer to ultimately cash flow those businesses. I think what I'm really excited about is when we greenfield in particular, and it's greenfield inside a children's hospital, the revenue generation is literally day one. There's no build it and then wait. It's more about the six months to a year ramp up and the cost associated with that to get a greenfield location up and running. The day that greenfield's up and running, particularly if it's in a great location inside a children's hospital, starts to generate really strong revenue. The payback is very solid for us. I think we're very pleased with our early assessments of how fast these things would pay back. Certainly, you know we're working hard to improve cash flow for the business and driving this year to break even at minimum. I think the OPSB strategy was one that we felt like we could drive top-line revenue growth, help an enormous amount of patients with our customer base, and it had positive implications on cash flow, and I think we're seeing that. I think Q4 showed that out pretty well in terms of the cash generation that we produced. Yeah. Okay. Can you talk about how OPSB compares to the implant business in terms of gross and EBITDA margins and then cash flow? Yeah, absolutely. The OPSB business does have a slightly lower gross margin than the implant business. There is a much lower selling cost on that side of the business than there is on the implant side of the business, where we're actually standing in all the surgeries. The additional benefit is there's no consigned inventory to deploy, and no real significant capital expenditure per revenue dollar that's driving growth on that side of the business. As a result, the contribution margin of that business is actually higher than the implant business. The business is also generating positive cash flow dynamics, which is great in that it doesn't have this big capital-intensive way the implant business does. We're really encouraged on how things are dropping through on that side of the business, as well as the tremendous leverage we're getting on the implant side of our business. Yeah, got it. Is there potential to expand this clinic model outside the U.S., and if so, what areas or regions do you think would be appropriate? Yeah, certainly an opportunity to do that. You heard us announce at some point last year that we expanded our clinic in Ireland, where we have a very rapidly growing scoliosis implant presence, and so we see opportunities there. I think there are opportunities in other Western European markets, certainly. Certainly, we'll be smart about that. We've got opportunities in our own backyard, so it's not maybe the thrust of everything we're doing, but we'll be opportunistic in markets like Ireland, potentially U.K., Germany, some of these Western European markets where we have a strong presence, and particularly where we have a strong scoliosis presence, because I think those markets, there's a real opportunity, particularly for scoliosis bracing in certain countries in Western Europe. Okay. Got it. Moving on to enabling technologies. Maybe you can give us an update on some of the navigation system, and I don't know if there's any kind of metrics you could share in terms of installed base or utilization or things like that. Yeah. We've never disclosed a specific number, but I think it's fair to say there's north of 20 units in the field in the United States at this stage, and 300 children's hospitals. We have a huge opportunity there still. Not every hospital is a candidate for 7D, dependent upon volume. In a lot of those hospitals, we're also selling our FIREFLY navigation with our 3D-printed guides. That remains a growth driver for us. The combination of FIREFLY as well as 7D has been very positive for the business. I think in locations where we've had installations, we see our scoliosis volume ramp, which is exactly what we had hoped for. I think we still have a very large pipeline. Now, we talked a while ago about our guide, and we don't know exactly when some of these units might close. Some quarters it could be several, some quarters it could be none. We've tried to dampen at least the impact of that kind of rollercoaster in terms of the capital side of our business. We remain quite bullish on 7D, especially with the MRVision, which now essentially surgeons can offer radiation-free scoliosis surgery. That's wildly important to pediatric patients and pediatric orthopedic surgeons, given the little body is accepting so much radiation. I think we've got a good opportunity throughout this year and into the next few years to continue to commercialize 7D. It's that and kind of the build with all the new scoliosis products we have are creating a nice momentum within that business. Yeah. 7D is kind of aimed at the higher volume customers, and then FIREFLY would be more suitable for kind of lower volume customers potentially? Yeah, I think that's fair. I think that there's certain pathologies and indications where FIREFLY works a little better. We do have accounts that have 7D units that also use FIREFLY for specific patients. FIREFLY is incredibly unique. We have people who are super dedicated to FIREFLY. They get fantastic results, and now we think FIREFLY can move to radiation-free as well. That's an opportunity for accounts that if you're not doing 50 or 100 scoliosis cases or if you have some form of navigation, but can't access it because maybe it's an adjacent to an adult hospital, FIREFLY is a nice option, and it's great to see. FIREFLY grew very nicely last year as a product family. We think the move to navigation and less radiation overall is driving adoption of these kinds of radiation-free technologies and is lifting both FIREFLY as well as 7D. Obviously then it's lifting our RESPONSE portfolio and the other devices within our scoliosis implant portfolio. Okay. The other thing you have in enabling technology is Playbook. I think you're starting to launch that now. Can you give us an overview of Playbook and kind of talk about the business model there? How does it work? Is it a subscription? Is it an annual fee, etc? Yeah. Playbook is a digital tool really designed to enhance workflow for pediatric orthopedic surgeons in children's hospitals. We're also adding a preoperative planning component to it that I think will be central to the launch of our new scoliosis fusion system, where there'll be some predictive portions of Playbook that'll allow for a predictive analysis of what levels to fuse, how to balance the spine, both in all three dimensions. I think we're just starting with Playbook. We have a few beta sites that we're getting ready to start in and we'll see. It's not a huge portion of our revenue in 2026, but we think, as we go out, it can become a bigger and bigger portion of our revenue. Within Playbook, surgeons can have specific digital workflows for not just scoliosis procedures, but for any of their procedures. You can imagine, Mike, we talked in the past, particularly post-COVID, where you have all of these surgical workflows, surgeons doing very complex pediatric scoliosis or pediatric limb reconstruction surgery, and when staffing becomes a challenge, if you don't have staff in there that really understands the instrumentation, the procedures, having a tool like Playbook where a surgeon has a custom workflow for you, I think is really critical. We've gotten very positive feedback so far. We're working through some implementations there. That's why we've projected pretty low revenue. I think as you look out over the next five years, these digital tools become really a big part of our story. From a revenue modeling standpoint, there's a small piece of hardware that goes with the Playbook unit, and then the opportunity to access certain features of Playbook that's based on a monthly fee or an annual fee. As more users are using Playbook, then that annual fee can grow over a period of time. Okay. You've also got this cochlear implant robotic system called iotaMotion. Can you give us an update on that? When do you think you'll launch it? How will you sell it, and how big is that market opportunity? Yeah. We think that, we're not 100% certain, but maybe you could think about this as a U.S. market. It's not huge, but maybe it's $20 million opportunity for these units in children's hospitals. It's an opportunity for us to leverage our existing sales force. Our pediatric orthopedic reps are kind of omnipresent in children's hospitals, so they know the ENT surgeons, the surgeons who are putting in cochlear implants as well. Generally speaking, that's using our sales force to make the introductions to our enabling technology team and then working towards implementation. In Q4, we launched the first iotaMotion robot inside Cincinnati Children's Hospitals, top 10 children's hospital in the U.S., and that implementation has gone well. We're learning from that, obviously. We wanted to get a few of these under our belt before we went kind of full launch. You could assume that sales team is learning a lot right now. We are educating our sales team and starting to talk to a number of physicians. Again, small numbers this year, but certainly will have an impact and probably more of an impact on revenue in Q3, Q4, as we start to place more and more of these units. Okay. Great. Shifting to the implant part of the business, on your last quarterly call, you talked about this super cycle of new products across the different categories and implants. Can you just highlight some of the products there that you're excited about? Yeah, absolutely. Mike, I have to say, I'm not up on the common lingo, so apparently my super cycle was not original, that other people have talked about super cycles, but I thought I was being quite original in terms of the volume of new things and what this looks like over the course of the next few years. I will say just broadly, I couldn't be more excited about the products that we are launching over the course of the next three years. I've been here 19 years. I have seen a welter of products we've launched since our earliest days of Cannulated Screws and small plates and screws, all of which have impact on kids' lives. I would say we're finally to a point as a company where the types of devices we are launching are so clinically relevant and so needed, and I don't want to call them moonshots, but they're certainly more complex in terms of the pathway to get a product approval, both through FDA as well as surgeon adoption and products like 3P, eLLi, our VerteGlide system, the next generation of our Scoli system, Halo-Gravity Traction, you name it. There is just a huge volume of projects. Yeah, they're all coming starting very early here. We'll start to launch some projects here in the first half of the year that will impact us in second half. I think this is a 3+ year run for us of some of the most compelling, clinically significant products. On the 3P side, we beta launched that at the end of last year, second half of last year. In the beta launch, I think we had, I don't know, 10 sets or less, so got a lot of feedback. The feedback has been extremely positive, and so we're hoping this summer to go kind of full tilt on the 3P Hip. I'd just remind you that 3P is a whole platform of plating products. Right now we've launched 3P Hip. We've recently gotten approval for the 3P Small-Mini, and there's a series of additional systems that we'll launch off of this 3P platform. I think it's the most substantial thing we've done, from a R&D perspective, in the trauma and limb deformity business in our company's history. I think that we'll see that'll be borne out in revenue, particularly as we get into Q3 and Q4 and we have a reasonable volume of set inventory out there on the street. Yeah, okay. Got it. Just with regard to 3P that you talked about, I know it's a comprehensive system kind of throughout the body, I guess. Maybe just highlight kind of the different versions that you have launched and what you still have coming. Yep. So far, we have beta launched the 3P Hip. Full release is kind of in process, so we hope to have sets out in the market in the back half of Q2. 3P Hip is a comprehensive fracture and osteotomy system for pediatric hips. It builds on some of the LCB system we have, as well as the Locking Proximal Femur plate. I think it's, from a technological standpoint, just far more advanced. Surgeons can perform procedures that they hadn't been able to perform procedures before. It's also in a segment of pediatric orthopedics where some of the large competitors have more recently abandoned. It kind of enters into a space with almost no competition whatsoever. I think the technology profile of 3P and how it's being used, particularly for very emergent trauma procedures where it is absolutely urgent that it's available to the surgeon, that's leading rapid adoption, I would say. We like the ASP. I think you've heard us talk about our efforts over the course of the last few years in R&D is to not only develop more clinically relevant products, but more cost-effective or cash-conservative types of systems. We see high ASP, high margin with a little less capital deployment required here. Our asset utilization metrics on 3P are, I would just say, dramatically better than what we had seen with some of our other plating systems. Next will be the Small and Mini, so a whole host of anatomically appropriate plates for pediatric patients, some that not only we don't have but aren't available from any company in the world, specific to peds. We'll work on the 3P knee and femur system, which should come out probably, you're talking 2027. Beyond that, there's a series of kind of implant specific systems for specific indications throughout the body. This will be our bread and butter kind of plate and screw system for the next 10 years, I would say. Okay. Got it. Just on the fusion side, I think you've got a new kind of comprehensive pedicle screw or fusion system coming. Can you just talk about that and the timing and then how it compares to the RESPONSE system that you currently have? Yeah. RESPONSE has been out, you may know, we've probably had that out now 14 summers, so it has been around for a long time. Certainly, we've adapted it. We've expanded its opportunity with neuromuscular, with RESPONSE Rib and Pelvic. RESPONSE continues to grow, so it has been a hard one to kind of think about developing another system when it's grown so well. I think that there's certain techniques, more modern surgical techniques for scoliosis that allow for very complex vertebral body derotation, helping balance the spine more appropriately that I think surgeons are interested in. That system will accomplish that. It'll also be connected to an AI-based platform called 7D that will be able to give surgeons a very specific roadmap for what implants they're going to need and hopefully be able to run simulations to show surgeons what outcome they should get based on their choice of implants, where they choose to place those implants, what rod stiffnesses they use. The new system also offers a whole host of different stiffness opportunities for surgeons with the rods, which has become a big hot topic. To be able to control the spine, you need very stiff but strong rods, and so that'll have that as well. I think just a host of very low profile implants that can accept large, strong rods with very, very complex derotation and rod reduction instrumentation. What we've done is also tried to develop the system in a personalized way. We have seen so frequently when we bring our trays in to do a fusion procedure that at times upwards of 50% of the instruments and implants aren't used by a specific surgeon. They just don't need it because their technique is slightly different. What we're working towards is a customization of each set, so a surgeon can go through a whole host of different instrumentation and implants, and we can be very specific about building a set for that specific surgeon. Obviously that drives some adoption, that drives down our costs obviously, and it helps the efficiency in the OR, particularly when you compare that to AI-based preoperative planning. Again, I think on the Scoli side, that comes on the heels of launch of VerteGlide, that comes on the heels of our first inpatient with eLLi. The success we've had over the course of the last 14-15 years in fusion, I think this just steps us up another level. Okay, great. You mentioned eLLi and VerteGlide. I did want to touch on the EOS category. Maybe just tell us more about VerteGlide and eLLi, where do they fit? eLLi, I know is probably the more complex product. When do you think you'll be able to launch that, and what is it going to take from a regulatory standpoint to get that through the FDA? Yeah. I would just say first with VerteGlide, we're in the process of starting to launch VerteGlide now. We did some cases in fourth quarter. They went well. We've done some cases here in Q1. We are extremely pleased with the outcomes we're seeing with VerteGlide. The demand for VerteGlide, I think is a little higher than we had suspected. We're in a spot where we got to get inventory to the street. They're all elective procedures, so we can manage them without a huge influx of inventory. We got sets coming in, and we've got surgeons trying to schedule cases that we've been able to shuffle the deck about every week, every day to make sure that we get cases covered. We're training a lot of surgeons, and we're going to have to get some sets out there to be able to extinguish the demand. It's very encouraging. What we're seeing with eLLi is it being used in locations where we have historically not had as strong of a presence with our fusion system, or maybe we were off contract. This is definitely propelling our fusion system as well, RESPONSE. That was the strategy. It's incredibly gratifying to help some of these kids, Mike. These are tiny kids. I mean, a lot of our patients we're treating are under four years old with, well, they're very bad deformities, and they need a treatment like this. Encouraging to see, and I think it's going to have a big impact, particularly back half of this year, eLLi, you're right. eLLi is a more complex pathway from a regulatory perspective, but we do have approval from the FDA to start to do procedures here. We think in probably first in-patient in Q4, and we can bill for those procedures, so that is always a positive. We're going to run a minimum of 50-patient study there, and we will probably back and forth with FDA in terms of after we do so many of these procedures and they go well, what's the endpoint before we can go live and start to expand? I think eLLi is more from a revenue perspective, a 2027-2028 story, at least in the United States. There is opportunities for us to launch eLLi in markets outside of the United States that will probably impact revenue a little bit sooner. We are on a good path and very excited about first inpatient here in this year. Okay. ApiFix. It's been a few years since you launched that. Maybe give an update there and where does that kind of fit? I guess that's not EOS per se, but where does that fit relative to some of your other products? Yeah. I mean, when you think about ApiFix and you think about our aspiration to take care of the entire continuum of care in Scoli. Now that we got scoliosis bracing, you start with bracing, then you may move to a non-fusion opportunity with ApiFix, and that's what we're seeing. We've got the Early Onset Scoliosis for these more congenital complex procedures, and then you move to fusion. I think the portfolio is, over the course of the next few years, as robust and as complete as any company in the history of pediatric spine surgery. I think ApiFix is-- what we are seeing with ApiFix is as the results of our study come in, I think surgeons are narrowing their indications. There is a certain segment of the patient population where ApiFix works extremely well, and that was the goal of the study, which is the highest probability patient to avoid fusion. We have seen extremely low fusion rates across the entire indications, but certainly very low revision rates and low fusion rates in a kind of a more narrow band. What we're seeing is that more surgeons adopting ApiFix, but in a more selective approach, which is kind of where this is going. Again, super high ASP for us, really good margins, really good asset utilization, and more and more surgeons using it. Not going to be $100 million product line for us, but certainly it is a perfect fit within our scoliosis portfolio. You're right, it isn't EOS, but there are surgeons who are using it as a tool even in that patient population. Okay. All right. Just want to move on to some more financially oriented questions. Last year, I think it was the third quarter, you had some challenges in the Latin American business and with some replacements. What did you learn from that, and what are you doing to avoid those sorts of issues in the future? Yeah, absolutely. Great question. Specifically the Latin America, it comes down to set sales. As we're selling sets at our cost, no margin, into our stocking distributors, the timing of those creates a lumpiness. What we've done is in the fall, last fall, November of 2025, we have purchased Our largest distributor in Brazil, we have about 15 or 16 distributors down there. We've purchased our largest distributor, and so now we've transitioned from a pure distributor model to a direct ownership model that's selling directly to the hospitals. It improves our visibility, it improves our cash flow collections, which is a huge impact for us, and allows us more of a normalized ordering pattern as surgeries are happening, as opposed to lumpiness of sales of sets. It positions us for more sustainable growth in Brazil over time, kind of takes us from wholesale to retail sales, if you will. Very positive move for us in the fall of last year, and we look forward to that smoothing things out for us going forward. We also, on the 7D side of things, that's a capital sale, tons of demand from the surgeon. As Dave mentioned, radiation-free navigation system, so the surgeons all love it. Difficult to work through all of the legal documentation with the hospitals. Sometimes they have a different timeframe than we do. Doesn't always match up exactly with our quarter end, if you will. That, in the past, has created some lumpiness in our sales. What we did back in the third quarter is we removed any anticipated growth from that business out of our guidance. That eliminates some of the lumpiness from our revenue forecast going forward. Again, tons of demand for the product. We're going to continue to sell that product, but the timing of it can come and go in different months and different quarters. To eliminate that lumpiness in our forecast, at least, we've just removed that piece of the cycle. We think we are in a very good place in both of these challenges that we had last year, for 2026 and beyond. Okay. Just with regard to gross margin, what's the outlook there? You've got some moving pieces in terms of OPSB, the implants, you've got some higher margin implants. You're launching EOS. You're also growing pretty rapidly outside the U.S., which is probably lower gross margin. I think your margin was up last year. I can't remember what you guided to this year, but just thinking over the next few years, is it going to be flat, up, down generally? Yeah, it's a great point. A lot of moving pieces, to your point. We did improve margins slightly, half a basis point in 2025, about 73% for the full year of 2025, and that's where I've indicated it should be in 2026 and 2027. OPSB growing faster does put a little pressure on it. Going to retail in Brazil helps that improve our margins. As you said, these new product launches, small today, but as they grow, they will come in at higher gross margins as well, which definitely helps offset a little bit of the OPSB pressure that we're seeing. You mix all that together, and we've got plans in place to maintain that kind of 73% for the next couple of years. Okay. In terms of set placements, you're planning, I think, $10 million for this year, and it's down from $17 million last year and $20 million the year before. It's kind of a double-edged sword, I guess, because on the one hand, it's good for cash flow, but on the other hand, I think people may be a little reading into it that it's not a positive indicator. I know that's not the case, but maybe you can explain why you don't need to spend as much on sets right now? Yeah, absolutely. Three years ago, it was revenue at all costs, and as Dave said, we've changed that a bit to be aggressive revenue, but improving Adjusted EBITDA and dramatic improvements on the cash flow. Getting to positive cash, free cash flow in the fourth quarter of last year was a big deal. We'll be negative here in the first half of this year because of set deployment, but definitely getting to free cash flow breakeven, maybe even slightly positive in 2026. Improved EBITDA is a piece of that. The second piece of that is reduced deployment of sets from $17 in 2025 down to $10 in 2026, and then improved working capital performance. On the sets specifically, if you look at the efficiency, the revenue we're going to generate from this $10 million set deployment in 2026, it's all brand-new products, effectively, as opposed to legacy systems. As Dave mentioned, we're getting higher prices, lower set costs on these new technologies. Effectively, with this $10 million of deployment in 2026, it's probably the same revenue growth equivalent of $20 million about four or five years ago when we were deploying that amount of capital. It's double, or maybe a little better in some cases, of our legacy system on the return on investment revenue to investment dollars. Very excited about that, and it has very significant clinical unmet needs and includes premium pricing, which helps the gross margin, helps our return on asset, and helps our free cash flow utilization improve dramatically. We're excited to see that not only in 2026, but in 2027 and 2028 as well. Okay, just final question. I know you've done a fair bit of M&A over the years, but it does seem like you've got a pretty comprehensive offering, at least in orthopedics at this point. One, would you look at doing any additional M&A in orthopedics? Two, I think you've talked about starting to branch out of orthopedics into other pediatric medical devices. Would that be something where we're more likely to maybe see some M&A outside of the orthopedics area? Yeah, I think that we would still be interested in acquisitions within pediatrics, particularly maybe you would see us continue on the OPSB side, where there's opportunities for products, and certainly interested on continuing acquisition on the clinic expansion side. I think from an implant standpoint, it's pretty hard to see that. There's not really any other pediatric orthopedic assets that we're aware of, at least at this stage. To answer your question about expanding, I think the aspiration over time is to continue to be able to surround the pediatric surgeon and the children's hospital with all the devices that they could use, and to be able to leverage our commercial channel and our infrastructure in other pediatric subspecialties. Certainly not going to happen overnight, but I think you could expect that when we do that, if we get more aggressive, it would probably be through acquisition. If you've seen us in the past, we didn't start OPSB ground up. We started with MD Orthopaedics, a well-known name, and then we built off of and grew off of that. I think that playbook would probably be what you'll see when we start to expand into other subspecialties. All right. Well, that was my last question. I don't see any questions from participants. I think we're going to have to wrap up there. Thanks, guys. Appreciate it. Hope you have some good meetings today. Great. Thanks, Mike. I appreciate you. Thanks, Mike. Appreciate it.

Speaker 3: Good morning. Thanks for joining us again at the 25th Annual Needham Healthcare Conference. I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research team at Needham & Company. I'm pleased to introduce OrthoPediatrics. Presenting from the company today, we have President and CEO, David Bailey, and CFO and COO, Fred Hite. Good morning. good morning Thanks for joining us again at the 25th Annual Needham Healthcare Conference. thanks for joining us again at the 25th annual needham healthcare conference I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research team at Needham & Company. i'm mike matson and i lead the medtech and diagnostics equity research team at needham & company I'm pleased to introduce OrthoPediatrics. i'm pleased to introduce orthopediatrics Presenting from the company today, we have President and CEO, David Bailey, and CFO and COO, Fred Hite. presenting from the company today we have president and ceo david bailey and cfo and coo fred hite Instead of a standard presentation, we are going to do a Q&A or fireside session. If you do have questions you would like to ask, you can submit them electronically through the conference website, or feel free to email them to me at [email protected] and I'll do my best to fit them in. Again, thanks for joining us, David and Fred. I'm just going to go straight into the questions here. Given all the headlines, I want to start with some macro topics. Can you start by maybe commenting on your exposure to oil prices? I'd assume it's mainly through freight, but I don't know if there's any kind of raw materials impact or anything like that. Instead of a standard presentation, we are going to do a Q&A or fireside session. instead of a standard presentation we are going to do a q&a or fireside session If you do have questions you would like to ask, you can submit them electronically through the conference website, or feel free to email them to me at [email protected] and I'll do my best to fit them in. if you do have questions you would like to ask you can submit them electronically through the conference website or feel free to email them to me at [email protected] and i'll do my best to fit them in Again, thanks for joining us, David and Fred. again thanks for joining us david and fred I'm just going to go straight into the questions here. i'm just going to go straight into the questions here Given all the headlines, I want to start with some macro topics. given all the headlines i want to start with some macro topics Can you start by maybe commenting on your exposure to oil prices? can you start by maybe commenting on your exposure to oil prices I'd assume it's mainly through freight, but I don't know if there's any kind of raw materials impact or anything like that. i'd assume it's mainly through freight but i don't know if there's any kind of raw materials impact or anything like that

Speaker 2: Yeah. First, Mike, thanks for having us. We appreciate Needham and attending this conference, so thank you for that. Related to macro oil prices, you are correct. So freight, a small impact there on the freight side. We haven't seen it just yet, but I'm sure it'll be coming. And very, very little impact on the material cost of goods sold. So most of our products are metal, instruments, implants, cases, and trays. A little bit on the bracing side, but a very, very small portion of our overall cost of goods sold. So we're not anticipating that having any significant impact, and we'll manage through the freight as it comes. Hopefully, it won't be lasting long, and we'll get back to normal. Yeah. yeah First, Mike, thanks for having us. first mike thanks for having us We appreciate Needham and attending this conference, so thank you for that. we appreciate needham and attending this conference so thank you for that Related to macro oil prices, you are correct. related to macro oil prices you are correct So freight, a small impact there on the freight side. so freight a small impact there on the freight side We haven't seen it just yet, but I'm sure it'll be coming. we haven't seen it just yet but i'm sure it'll be coming And very, very little impact on the material cost of goods sold. and very very little impact on the material cost of goods sold So most of our products are metal, instruments, implants, cases, and trays. so most of our products are metal instruments implants cases and trays A little bit on the bracing side, but a very, very small portion of our overall cost of goods sold. a little bit on the bracing side but a very very small portion of our overall cost of goods sold So we're not anticipating that having any significant impact, and we'll manage through the freight as it comes. so we're not anticipating that having any significant impact and we'll manage through the freight as it comes Hopefully, it won't be lasting long, and we'll get back to normal. hopefully it won't be lasting long and we'll get back to normal

Speaker 3: Okay. You're not concerned about any sort of knock-on effects of the war, like shortages of other materials like metals or anything like that, or just generalized inflation affecting the business? Okay. okay You're not concerned about any sort of knock-on effects of the war, like shortages of other materials like metals or anything like that, or just generalized inflation affecting the business? you're not concerned about any sort of knock-on effects of the war like shortages of other materials like metals or anything like that or just generalized inflation affecting the business

Speaker 2: No. We continue to monitor it like everybody else, obviously, but at this point, we don't see that having any negative impact on our business. No. no We continue to monitor it like everybody else, obviously, but at this point, we don't see that having any negative impact on our business. we continue to monitor it like everybody else obviously but at this point we don't see that having any negative impact on our business

Speaker 3: Okay. All right. Well, with that out of the way, I want to move on to talk more about the specific businesses here. Starting with OPSB, I was wondering if you could give us an update on the clinics. How many clinics have you opened since the Boston OP acquisition, and what's your target for the rest of this year in terms of the number you're planning to open? Okay. okay All right. all right Well, with that out of the way, I want to move on to talk more about the specific businesses here. well with that out of the way i want to move on to talk more about the specific businesses here Starting with OPSB, I was wondering if you could give us an update on the clinics. starting with opsb i was wondering if you could give us an update on the clinics How many clinics have you opened since the Boston OP acquisition, and what's your target for the rest of this year in terms of the number you're planning to open? how many clinics have you opened since the boston op acquisition and what's your target for the rest of this year in terms of the number you're planning to open

Speaker 1: Yeah. Thanks, Mike. If you remember correctly, when we acquired Boston a couple of years ago, they had about 25 clinics, primarily clustered in the Northeast around Boston, Philadelphia, that area. At this stage, we have north of 45 clinics. That number changes sometimes. Sometimes we're consolidating smaller clinics into bigger clinics. Yeah. yeah Thanks, Mike. thanks mike If you remember correctly, when we acquired Boston a couple of years ago, they had about 25 clinics, primarily clustered in the Northeast around Boston, Philadelphia, that area. if you remember correctly when we acquired boston a couple of years ago they had about 25 clinics primarily clustered in the northeast around boston philadelphia that area At this stage, we have north of 45 clinics. at this stage we have north of 45 clinics That number changes sometimes. that number changes sometimes Sometimes we're consolidating smaller clinics into bigger clinics. sometimes we're consolidating smaller clinics into bigger clinics Sometimes we're actually setting up satellite clinics in locations where we already have a bigger clinic. I'm not sure that the specific number is as relevant as the number of territories. If you remember a few years ago, we talked about scaling into what we view as 80 territories in the United States that would encompass about all 300 children's hospitals. We expect by the end of this year to be in 27 of those at minimum, which was our target a few years ago. Sometimes we're actually setting up satellite clinics in locations where we already have a bigger clinic. sometimes we're actually setting up satellite clinics in locations where we already have a bigger clinic I'm not sure that the specific number is as relevant as the number of territories. i'm not sure that the specific number is as relevant as the number of territories If you remember a few years ago, we talked about scaling into what we view as 80 territories in the United States that would encompass about all 300 children's hospitals. if you remember a few years ago we talked about scaling into what we view as 80 territories in the united states that would encompass about all 300 children's hospitals We expect by the end of this year to be in 27 of those at minimum, which was our target a few years ago. we expect by the end of this year to be in 27 of those at minimum which was our target a few years ago I think we're on pace, if not a little bit ahead of pace in terms of clinic expansion. We continue to see the demand for locations probably is a little higher than we have the capacity to open them. We're trying to be judicious in terms of how many we open simultaneously, but it's all been very positive so far. We continue to see that business grow really nicely, and I think we're probably a little ahead of schedule from where we expected in terms of revenue growth and profitability for that business. I think we're on pace, if not a little bit ahead of pace in terms of clinic expansion. i think we're on pace if not a little bit ahead of pace in terms of clinic expansion We continue to see the demand for locations probably is a little higher than we have the capacity to open them. we continue to see the demand for locations probably is a little higher than we have the capacity to open them We're trying to be judicious in terms of how many we open simultaneously, but it's all been very positive so far. we're trying to be judicious in terms of how many we open simultaneously but it's all been very positive so far We continue to see that business grow really nicely, and I think we're probably a little ahead of schedule from where we expected in terms of revenue growth and profitability for that business. we continue to see that business grow really nicely and i think we're probably a little ahead of schedule from where we expected in terms of revenue growth and profitability for that business

Speaker 3: Okay. Got it. Can you talk about the sales team in that business? Is it kind of based on the territories, as you mentioned? Is it one per territory or something like that? What are your plans to kind of grow that group? Okay. okay Got it. got it Can you talk about the sales team in that business? can you talk about the sales team in that business Is it kind of based on the territories, as you mentioned? is it kind of based on the territories as you mentioned Is it one per territory or something like that? is it one per territory or something like that What are your plans to kind of grow that group? what are your plans to kind of grow that group

Speaker 1: Yeah. We generally are scaling our sales team as we scale clinics. It's a small group right now. I think it's north of 10 or so at this stage. You can imagine that we have more than 200 commercial people here in the United States selling the implant products. Mike, that involves staying in the operating room. Being the service component of that is very heavy. Yeah. yeah We generally are scaling our sales team as we scale clinics. we generally are scaling our sales team as we scale clinics It's a small group right now. it's a small group right now I think it's north of 10 or so at this stage. i think it's north of 10 or so at this stage You can imagine that we have more than 200 commercial people here in the United States selling the implant products. you can imagine that we have more than 200 commercial people here in the united states selling the implant products Mike, that involves staying in the operating room. mike that involves staying in the operating room Being the service component of that is very heavy. being the service component of that is very heavy It involves a lot more people than we'll require to ultimately scale on the OPSB side. As we continue to grow, we continue to add a few people. You could imagine our aspiration to cover all 300 children's hospitals. That'll be a decent sized sales team eventually. It certainly isn't something that we're obligated to invest in before we have clinics in those particular regions. It involves a lot more people than we'll require to ultimately scale on the OPSB side. it involves a lot more people than we'll require to ultimately scale on the opsb side As we continue to grow, we continue to add a few people. as we continue to grow we continue to add a few people You could imagine our aspiration to cover all 300 children's hospitals. you could imagine our aspiration to cover all 300 children's hospitals That'll be a decent sized sales team eventually. that'll be a decent sized sales team eventually It certainly isn't something that we're obligated to invest in before we have clinics in those particular regions. it certainly isn't something that we're obligated to invest in before we have clinics in those particular regions

Speaker 3: Yeah. Okay. That makes sense. How are you sort of prioritizing the areas of the country or the children's hospitals where you're opening your clinics, I guess the territories as you mentioned? Yeah. yeah Okay. okay That makes sense. that makes sense How are you sort of prioritizing the areas of the country or the children's hospitals where you're opening your clinics, I guess the territories as you mentioned? how are you sort of prioritizing the areas of the country or the children's hospitals where you're opening your clinics i guess the territories as you mentioned

Speaker 1: Yeah. Yeah. yeah

Speaker 3: How do you decide where to go next? How do you decide where to go next? how do you decide where to go next

Speaker 1: Yeah, you can imagine locations where we have incredibly strong commercial relationships already on the implant side are natural fits for us. We serve all 300 children's hospitals, but the places where we are maybe more deeply penetrated, I think, is generally a good barometer for where we're going to see the fastest uptick. Yeah, you can imagine locations where we have incredibly strong commercial relationships already on the implant side are natural fits for us. yeah you can imagine locations where we have incredibly strong commercial relationships already on the implant side are natural fits for us We serve all 300 children's hospitals, but the places where we are maybe more deeply penetrated, I think, is generally a good barometer for where we're going to see the fastest uptick. we serve all 300 children's hospitals but the places where we are maybe more deeply penetrated i think is generally a good barometer for where we're going to see the fastest uptick I also think that we've learned some lessons over the course of the last few years in that if we can get clinics inside the children's hospital versus starting with a satellite and then getting one inside the children's hospital, then that's normally a benefit to us in terms of revenue and profitability. We tend to prioritize these opportunities where there's a hospital that's asking as well as the physicians, they're going to have space available to us. I also think that we've learned some lessons over the course of the last few years in that if we can get clinics inside the children's hospital versus starting with a satellite and then getting one inside the children's hospital, then that's normally a benefit to us in terms of revenue and profitability. i also think that we've learned some lessons over the course of the last few years in that if we can get clinics inside the children's hospital versus starting with a satellite and then getting one inside the children's hospital then that's normally a benefit to us in terms of revenue and profitability We tend to prioritize these opportunities where there's a hospital that's asking as well as the physicians, they're going to have space available to us. we tend to prioritize these opportunities where there's a hospital that's asking as well as the physicians they're going to have space available to us In some cases, we're even slowing down a particular region because we could set up a clinic maybe six months earlier, but if we wait six months, we'll have kind of a choice location inside a children's hospital. I think it makes more sense for us to wait in those instances and have our physical location directly in the children's hospitals. We've seen the economics of that work really well for us. The uptick in revenue works really well for us. Those are ways that we're prioritizing where we select locations. In some cases, we're even slowing down a particular region because we could set up a clinic maybe six months earlier, but if we wait six months, we'll have kind of a choice location inside a children's hospital. in some cases we're even slowing down a particular region because we could set up a clinic maybe six months earlier but if we wait six months we'll have kind of a choice location inside a children's hospital I think it makes more sense for us to wait in those instances and have our physical location directly in the children's hospitals. i think it makes more sense for us to wait in those instances and have our physical location directly in the children's hospitals We've seen the economics of that work really well for us. we've seen the economics of that work really well for us The uptick in revenue works really well for us. the uptick in revenue works really well for us Those are ways that we're prioritizing where we select locations. those are ways that we're prioritizing where we select locations

Speaker 3: Yeah. Okay. That makes sense. I think in the Investor Day, maybe you talked about the return on investment in new clinics. I think it was pretty rapid payback there. What are you seeing in the real world compared to what you expected in terms of the investment required and the payback period for those new clinics that you're opening? Yeah. yeah Okay. okay That makes sense. that makes sense I think in the Investor Day, maybe you talked about the return on investment in new clinics. i think in the investor day maybe you talked about the return on investment in new clinics I think it was pretty rapid payback there. i think it was pretty rapid payback there What are you seeing in the real world compared to what you expected in terms of the investment required and the payback period for those new clinics that you're opening? what are you seeing in the real world compared to what you expected in terms of the investment required and the payback period for those new clinics that you're opening

Speaker 1: Yeah, I think it's very consistent with what we thought. We see a payback faster on these clinics that are, again, inside children's hospitals. Certainly, when we do an acqui-hire, some of those acqui-hires, they're certainly almost all profitable from the very beginning, so it impacts top line and impacts profitability. The greenfields, while less of an investment, take a little bit longer to ultimately cash flow those businesses. Yeah, I think it's very consistent with what we thought. yeah i think it's very consistent with what we thought We see a payback faster on these clinics that are, again, inside children's hospitals. we see a payback faster on these clinics that are again inside children's hospitals Certainly, when we do an acqui-hire, some of those acqui-hires, they're certainly almost all profitable from the very beginning, so it impacts top line and impacts profitability. certainly when we do an acqui-hire some of those acqui-hires they're certainly almost all profitable from the very beginning so it impacts top line and impacts profitability The greenfields, while less of an investment, take a little bit longer to ultimately cash flow those businesses. the greenfields while less of an investment take a little bit longer to ultimately cash flow those businesses I think what I'm really excited about is when we greenfield in particular, and it's greenfield inside a children's hospital, the revenue generation is literally day one. There's no build it and then wait. It's more about the six months to a year ramp up and the cost associated with that to get a greenfield location up and running. The day that greenfield's up and running, particularly if it's in a great location inside a children's hospital, starts to generate really strong revenue. The payback is very solid for us. I think we're very pleased with our early assessments of how fast these things would pay back. I think what I'm really excited about is when we greenfield in particular, and it's greenfield inside a children's hospital, the revenue generation is literally day one. i think what i'm really excited about is when we greenfield in particular and it's greenfield inside a children's hospital the revenue generation is literally day one There's no build it and then wait. there's no build it and then wait It's more about the six months to a year ramp up and the cost associated with that to get a greenfield location up and running. it's more about the six months to a year ramp up and the cost associated with that to get a greenfield location up and running The day that greenfield's up and running, particularly if it's in a great location inside a children's hospital, starts to generate really strong revenue. the day that greenfield's up and running particularly if it's in a great location inside a children's hospital starts to generate really strong revenue The payback is very solid for us. the payback is very solid for us I think we're very pleased with our early assessments of how fast these things would pay back. i think we're very pleased with our early assessments of how fast these things would pay back Certainly, you know we're working hard to improve cash flow for the business and driving this year to break even at minimum. I think the OPSB strategy was one that we felt like we could drive top-line revenue growth, help an enormous amount of patients with our customer base, and it had positive implications on cash flow, and I think we're seeing that. I think Q4 showed that out pretty well in terms of the cash generation that we produced. Certainly, you know we're working hard to improve cash flow for the business and driving this year to break even at minimum. certainly you know we're working hard to improve cash flow for the business and driving this year to break even at minimum I think the OPSB strategy was one that we felt like we could drive top-line revenue growth, help an enormous amount of patients with our customer base, and it had positive implications on cash flow, and I think we're seeing that. i think the opsb strategy was one that we felt like we could drive top-line revenue growth help an enormous amount of patients with our customer base and it had positive implications on cash flow and i think we're seeing that I think Q4 showed that out pretty well in terms of the cash generation that we produced. i think q4 showed that out pretty well in terms of the cash generation that we produced

Speaker 3: Yeah. Okay. Can you talk about how OPSB compares to the implant business in terms of gross and EBITDA margins and then cash flow? Yeah. yeah Okay. okay Can you talk about how OPSB compares to the implant business in terms of gross and EBITDA margins and then cash flow? can you talk about how opsb compares to the implant business in terms of gross and ebitda margins and then cash flow

Speaker 2: Yeah, absolutely. The OPSB business does have a slightly lower gross margin than the implant business. There is a much lower selling cost on that side of the business than there is on the implant side of the business, where we're actually standing in all the surgeries. The additional benefit is there's no consigned inventory to deploy, and no real significant capital expenditure per revenue dollar that's driving growth on that side of the business. Yeah, absolutely. yeah absolutely The OPSB business does have a slightly lower gross margin than the implant business. the opsb business does have a slightly lower gross margin than the implant business There is a much lower selling cost on that side of the business than there is on the implant side of the business, where we're actually standing in all the surgeries. there is a much lower selling cost on that side of the business than there is on the implant side of the business where we're actually standing in all the surgeries The additional benefit is there's no consigned inventory to deploy, and no real significant capital expenditure per revenue dollar that's driving growth on that side of the business. the additional benefit is there's no consigned inventory to deploy and no real significant capital expenditure per revenue dollar that's driving growth on that side of the business As a result, the contribution margin of that business is actually higher than the implant business. The business is also generating positive cash flow dynamics, which is great in that it doesn't have this big capital-intensive way the implant business does. We're really encouraged on how things are dropping through on that side of the business, as well as the tremendous leverage we're getting on the implant side of our business. As a result, the contribution margin of that business is actually higher than the implant business. as a result the contribution margin of that business is actually higher than the implant business The business is also generating positive cash flow dynamics, which is great in that it doesn't have this big capital-intensive way the implant business does. the business is also generating positive cash flow dynamics which is great in that it doesn't have this big capital-intensive way the implant business does We're really encouraged on how things are dropping through on that side of the business, as well as the tremendous leverage we're getting on the implant side of our business. we're really encouraged on how things are dropping through on that side of the business as well as the tremendous leverage we're getting on the implant side of our business

Speaker 3: Yeah, got it. Is there potential to expand this clinic model outside the U.S., and if so, what areas or regions do you think would be appropriate? Yeah, got it. yeah got it Is there potential to expand this clinic model outside the U.S., and if so, what areas or regions do you think would be appropriate? is there potential to expand this clinic model outside the u.s and if so what areas or regions do you think would be appropriate

Speaker 1: Yeah, certainly an opportunity to do that. You heard us announce at some point last year that we expanded our clinic in Ireland, where we have a very rapidly growing scoliosis implant presence, and so we see opportunities there. I think there are opportunities in other Western European markets, certainly. Certainly, we'll be smart about that. Yeah, certainly an opportunity to do that. yeah certainly an opportunity to do that You heard us announce at some point last year that we expanded our clinic in Ireland, where we have a very rapidly growing scoliosis implant presence, and so we see opportunities there. you heard us announce at some point last year that we expanded our clinic in ireland where we have a very rapidly growing scoliosis implant presence and so we see opportunities there I think there are opportunities in other Western European markets, certainly. i think there are opportunities in other western european markets certainly Certainly, we'll be smart about that. certainly we'll be smart about that We've got opportunities in our own backyard, so it's not maybe the thrust of everything we're doing, but we'll be opportunistic in markets like Ireland, potentially U.K., Germany, some of these Western European markets where we have a strong presence, and particularly where we have a strong scoliosis presence, because I think those markets, there's a real opportunity, particularly for scoliosis bracing in certain countries in Western Europe. We've got opportunities in our own backyard, so it's not maybe the thrust of everything we're doing, but we'll be opportunistic in markets like Ireland, potentially U.K., Germany, some of these Western European markets where we have a strong presence, and particularly where we have a strong scoliosis presence, because I think those markets, there's a real opportunity, particularly for scoliosis bracing in certain countries in Western Europe. we've got opportunities in our own backyard so it's not maybe the thrust of everything we're doing but we'll be opportunistic in markets like ireland potentially u.k germany some of these western european markets where we have a strong presence and particularly where we have a strong scoliosis presence because i think those markets there's a real opportunity particularly for scoliosis bracing in certain countries in western europe

Speaker 3: Okay. Got it. Moving on to enabling technologies. Maybe you can give us an update on some of the navigation system, and I don't know if there's any kind of metrics you could share in terms of installed base or utilization or things like that. Okay. okay Got it. got it Moving on to enabling technologies. moving on to enabling technologies Maybe you can give us an update on some of the navigation system, and I don't know if there's any kind of metrics you could share in terms of installed base or utilization or things like that. maybe you can give us an update on some of the navigation system and i don't know if there's any kind of metrics you could share in terms of installed base or utilization or things like that

Speaker 1: Yeah. We've never disclosed a specific number, but I think it's fair to say there's north of 20 units in the field in the United States at this stage, and 300 children's hospitals. We have a huge opportunity there still. Not every hospital is a candidate for 7D, dependent upon volume. In a lot of those hospitals, we're also selling our FIREFLY navigation with our 3D-printed guides. Yeah. yeah We've never disclosed a specific number, but I think it's fair to say there's north of 20 units in the field in the United States at this stage, and 300 children's hospitals. we've never disclosed a specific number but i think it's fair to say there's north of 20 units in the field in the united states at this stage and 300 children's hospitals We have a huge opportunity there still. we have a huge opportunity there still Not every hospital is a candidate for 7D, dependent upon volume. not every hospital is a candidate for 7d dependent upon volume In a lot of those hospitals, we're also selling our FIREFLY navigation with our 3D-printed guides. in a lot of those hospitals we're also selling our firefly navigation with our 3d-printed guides That remains a growth driver for us. The combination of FIREFLY as well as 7D has been very positive for the business. I think in locations where we've had installations, we see our scoliosis volume ramp, which is exactly what we had hoped for. I think we still have a very large pipeline. Now, we talked a while ago about our guide, and we don't know exactly when some of these units might close. That remains a growth driver for us. that remains a growth driver for us The combination of FIREFLY as well as 7D has been very positive for the business. the combination of firefly as well as 7d has been very positive for the business I think in locations where we've had installations, we see our scoliosis volume ramp, which is exactly what we had hoped for. i think in locations where we've had installations we see our scoliosis volume ramp which is exactly what we had hoped for I think we still have a very large pipeline. i think we still have a very large pipeline Now, we talked a while ago about our guide, and we don't know exactly when some of these units might close. now we talked a while ago about our guide and we don't know exactly when some of these units might close Some quarters it could be several, some quarters it could be none. We've tried to dampen at least the impact of that kind of rollercoaster in terms of the capital side of our business. We remain quite bullish on 7D, especially with the MRVision, which now essentially surgeons can offer radiation-free scoliosis surgery. Some quarters it could be several, some quarters it could be none. some quarters it could be several some quarters it could be none We've tried to dampen at least the impact of that kind of rollercoaster in terms of the capital side of our business. we've tried to dampen at least the impact of that kind of rollercoaster in terms of the capital side of our business We remain quite bullish on 7D, especially with the MRVision, which now essentially surgeons can offer radiation-free scoliosis surgery. we remain quite bullish on 7d especially with the mrvision which now essentially surgeons can offer radiation-free scoliosis surgery That's wildly important to pediatric patients and pediatric orthopedic surgeons, given the little body is accepting so much radiation. I think we've got a good opportunity throughout this year and into the next few years to continue to commercialize 7D. It's that and kind of the build with all the new scoliosis products we have are creating a nice momentum within that business. That's wildly important to pediatric patients and pediatric orthopedic surgeons, given the little body is accepting so much radiation. that's wildly important to pediatric patients and pediatric orthopedic surgeons given the little body is accepting so much radiation I think we've got a good opportunity throughout this year and into the next few years to continue to commercialize 7D. i think we've got a good opportunity throughout this year and into the next few years to continue to commercialize 7d It's that and kind of the build with all the new scoliosis products we have are creating a nice momentum within that business. it's that and kind of the build with all the new scoliosis products we have are creating a nice momentum within that business

Speaker 3: Yeah. 7D is kind of aimed at the higher volume customers, and then FIREFLY would be more suitable for kind of lower volume customers potentially? Yeah. 7D is kind of aimed at the higher volume customers, and then FIREFLY would be more suitable for kind of lower volume customers potentially? yeah 7d is kind of aimed at the higher volume customers and then firefly would be more suitable for kind of lower volume customers potentially

Speaker 1: Yeah, I think that's fair. I think that there's certain pathologies and indications where FIREFLY works a little better. We do have accounts that have 7D units that also use FIREFLY for specific patients. FIREFLY is incredibly unique. We have people who are super dedicated to FIREFLY. They get fantastic results, and now we think FIREFLY can move to radiation-free as well. Yeah, I think that's fair. yeah i think that's fair I think that there's certain pathologies and indications where FIREFLY works a little better. i think that there's certain pathologies and indications where firefly works a little better We do have accounts that have 7D units that also use FIREFLY for specific patients. we do have accounts that have 7d units that also use firefly for specific patients FIREFLY is incredibly unique. firefly is incredibly unique We have people who are super dedicated to FIREFLY. we have people who are super dedicated to firefly They get fantastic results, and now we think FIREFLY can move to radiation-free as well. they get fantastic results and now we think firefly can move to radiation-free as well That's an opportunity for accounts that if you're not doing 50 or 100 scoliosis cases or if you have some form of navigation, but can't access it because maybe it's an adjacent to an adult hospital, FIREFLY is a nice option, and it's great to see. FIREFLY grew very nicely last year as a product family. We think the move to navigation and less radiation overall is driving adoption of these kinds of radiation-free technologies and is lifting both FIREFLY as well as 7D. Obviously then it's lifting our RESPONSE portfolio and the other devices within our scoliosis implant portfolio. That's an opportunity for accounts that if you're not doing 50 or 100 scoliosis cases or if you have some form of navigation, but can't access it because maybe it's an adjacent to an adult hospital, FIREFLY is a nice option, and it's great to see. that's an opportunity for accounts that if you're not doing 50 or 100 scoliosis cases or if you have some form of navigation but can't access it because maybe it's an adjacent to an adult hospital firefly is a nice option and it's great to see FIREFLY grew very nicely last year as a product family. firefly grew very nicely last year as a product family We think the move to navigation and less radiation overall is driving adoption of these kinds of radiation-free technologies and is lifting both FIREFLY as well as 7D. we think the move to navigation and less radiation overall is driving adoption of these kinds of radiation-free technologies and is lifting both firefly as well as 7d Obviously then it's lifting our RESPONSE portfolio and the other devices within our scoliosis implant portfolio. obviously then it's lifting our response portfolio and the other devices within our scoliosis implant portfolio

Speaker 3: Okay. The other thing you have in enabling technology is Playbook. I think you're starting to launch that now. Can you give us an overview of Playbook and kind of talk about the business model there? How does it work? Is it a subscription? Is it an annual fee, etc? Okay. okay The other thing you have in enabling technology is Playbook. the other thing you have in enabling technology is playbook I think you're starting to launch that now. i think you're starting to launch that now Can you give us an overview of Playbook and kind of talk about the business model there? can you give us an overview of playbook and kind of talk about the business model there How does it work? how does it work Is it a subscription? is it a subscription Is it an annual fee, etc ? is it an annual fee etc

Speaker 1: Yeah. Playbook is a digital tool really designed to enhance workflow for pediatric orthopedic surgeons in children's hospitals. We're also adding a preoperative planning component to it that I think will be central to the launch of our new scoliosis fusion system, where there'll be some predictive portions of Playbook that'll allow for a predictive analysis of what levels to fuse, how to balance the spine, both in all three dimensions. Yeah. yeah Playbook is a digital tool really designed to enhance workflow for pediatric orthopedic surgeons in children's hospitals. playbook is a digital tool really designed to enhance workflow for pediatric orthopedic surgeons in children's hospitals We're also adding a preoperative planning component to it that I think will be central to the launch of our new scoliosis fusion system, where there'll be some predictive portions of Playbook that'll allow for a predictive analysis of what levels to fuse, how to balance the spine, both in all three dimensions. we're also adding a preoperative planning component to it that i think will be central to the launch of our new scoliosis fusion system where there'll be some predictive portions of playbook that'll allow for a predictive analysis of what levels to fuse how to balance the spine both in all three dimensions I think we're just starting with Playbook. We have a few beta sites that we're getting ready to start in and we'll see. It's not a huge portion of our revenue in 2026, but we think, as we go out, it can become a bigger and bigger portion of our revenue. Within Playbook, surgeons can have specific digital workflows for not just scoliosis procedures, but for any of their procedures. I think we're just starting with Playbook. i think we're just starting with playbook We have a few beta sites that we're getting ready to start in and we'll see. we have a few beta sites that we're getting ready to start in and we'll see It's not a huge portion of our revenue in 2026, but we think, as we go out, it can become a bigger and bigger portion of our revenue. it's not a huge portion of our revenue in 2026 but we think as we go out it can become a bigger and bigger portion of our revenue Within Playbook, surgeons can have specific digital workflows for not just scoliosis procedures, but for any of their procedures. within playbook surgeons can have specific digital workflows for not just scoliosis procedures but for any of their procedures You can imagine, Mike, we talked in the past, particularly post-COVID, where you have all of these surgical workflows, surgeons doing very complex pediatric scoliosis or pediatric limb reconstruction surgery, and when staffing becomes a challenge, if you don't have staff in there that really understands the instrumentation, the procedures, having a tool like Playbook where a surgeon has a custom workflow for you, I think is really critical. We've gotten very positive feedback so far. We're working through some implementations there. You can imagine, Mike, we talked in the past, particularly post-COVID, where you have all of these surgical workflows, surgeons doing very complex pediatric scoliosis or pediatric limb reconstruction surgery, and when staffing becomes a challenge, if you don't have staff in there that really understands the instrumentation, the procedures, having a tool like Playbook where a surgeon has a custom workflow for you, I think is really critical. you can imagine mike we talked in the past particularly post-covid where you have all of these surgical workflows surgeons doing very complex pediatric scoliosis or pediatric limb reconstruction surgery and when staffing becomes a challenge if you don't have staff in there that really understands the instrumentation the procedures having a tool like playbook where a surgeon has a custom workflow for you i think is really critical We've gotten very positive feedback so far. we've gotten very positive feedback so far We're working through some implementations there. we're working through some implementations there That's why we've projected pretty low revenue. I think as you look out over the next five years, these digital tools become really a big part of our story. From a revenue modeling standpoint, there's a small piece of hardware that goes with the Playbook unit, and then the opportunity to access certain features of Playbook that's based on a monthly fee or an annual fee. As more users are using Playbook, then that annual fee can grow over a period of time. That's why we've projected pretty low revenue. that's why we've projected pretty low revenue I think as you look out over the next five years, these digital tools become really a big part of our story. i think as you look out over the next five years these digital tools become really a big part of our story From a revenue modeling standpoint, there's a small piece of hardware that goes with the Playbook unit, and then the opportunity to access certain features of Playbook that's based on a monthly fee or an annual fee. from a revenue modeling standpoint there's a small piece of hardware that goes with the playbook unit and then the opportunity to access certain features of playbook that's based on a monthly fee or an annual fee As more users are using Playbook, then that annual fee can grow over a period of time. as more users are using playbook then that annual fee can grow over a period of time

Speaker 3: Okay. You've also got this cochlear implant robotic system called iotaMotion. Can you give us an update on that? When do you think you'll launch it? How will you sell it, and how big is that market opportunity? Okay. okay You've also got this cochlear implant robotic system called iotaMotion. you've also got this cochlear implant robotic system called iotamotion Can you give us an update on that? can you give us an update on that When do you think you'll launch it? when do you think you'll launch it How will you sell it, and how big is that market opportunity? how will you sell it and how big is that market opportunity

Speaker 1: Yeah. We think that, we're not 100% certain, but maybe you could think about this as a U.S. market. It's not huge, but maybe it's $20 million opportunity for these units in children's hospitals. It's an opportunity for us to leverage our existing sales force. Our pediatric orthopedic reps are kind of omnipresent in children's hospitals, so they know the ENT surgeons, the surgeons who are putting in cochlear implants as well. Yeah. yeah We think that, we're not 100% certain, but maybe you could think about this as a U.S. market. we think that we're not 100% certain but maybe you could think about this as a u.s market It's not huge, but maybe it's $20 million opportunity for these units in children's hospitals. it's not huge but maybe it's $20 million opportunity for these units in children's hospitals It's an opportunity for us to leverage our existing sales force. it's an opportunity for us to leverage our existing sales force Our pediatric orthopedic reps are kind of omnipresent in children's hospitals, so they know the ENT surgeons, the surgeons who are putting in cochlear implants as well. our pediatric orthopedic reps are kind of omnipresent in children's hospitals so they know the ent surgeons the surgeons who are putting in cochlear implants as well Generally speaking, that's using our sales force to make the introductions to our enabling technology team and then working towards implementation. In Q4, we launched the first iotaMotion robot inside Cincinnati Children's Hospitals, top 10 children's hospital in the U.S., and that implementation has gone well. We're learning from that, obviously. We wanted to get a few of these under our belt before we went kind of full launch. Generally speaking, that's using our sales force to make the introductions to our enabling technology team and then working towards implementation. generally speaking that's using our sales force to make the introductions to our enabling technology team and then working towards implementation In Q4, we launched the first iotaMotion robot inside Cincinnati Children's Hospitals, top 10 children's hospital in the U.S., and that implementation has gone well. in q4 we launched the first iotamotion robot inside cincinnati children's hospitals top 10 children's hospital in the u.s and that implementation has gone well We're learning from that, obviously. we're learning from that obviously We wanted to get a few of these under our belt before we went kind of full launch. we wanted to get a few of these under our belt before we went kind of full launch You could assume that sales team is learning a lot right now. We are educating our sales team and starting to talk to a number of physicians. Again, small numbers this year, but certainly will have an impact and probably more of an impact on revenue in Q3, Q4, as we start to place more and more of these units. You could assume that sales team is learning a lot right now. you could assume that sales team is learning a lot right now We are educating our sales team and starting to talk to a number of physicians. we are educating our sales team and starting to talk to a number of physicians Again, small numbers this year, but certainly will have an impact and probably more of an impact on revenue in Q3, Q4, as we start to place more and more of these units. again small numbers this year but certainly will have an impact and probably more of an impact on revenue in q3 q4 as we start to place more and more of these units

Speaker 3: Okay. Great. Shifting to the implant part of the business, on your last quarterly call, you talked about this super cycle of new products across the different categories and implants. Can you just highlight some of the products there that you're excited about? Okay. okay Great. great Shifting to the implant part of the business, on your last quarterly call, you talked about this super cycle of new products across the different categories and implants. shifting to the implant part of the business on your last quarterly call you talked about this super cycle of new products across the different categories and implants Can you just highlight some of the products there that you're excited about? can you just highlight some of the products there that you're excited about

Speaker 1: Yeah, absolutely. Mike, I have to say, I'm not up on the common lingo, so apparently my super cycle was not original, that other people have talked about super cycles, but I thought I was being quite original in terms of the volume of new things and what this looks like over the course of the next few years. I will say just broadly, I couldn't be more excited about the products that we are launching over the course of the next three years. I've been here 19 years. I have seen a welter of products we've launched since our earliest days of Cannulated Screws and small plates and screws, all of which have impact on kids' lives. Yeah, absolutely. yeah absolutely Mike, I have to say, I'm not up on the common lingo, so apparently my super cycle was not original, that other people have talked about super cycles, but I thought I was being quite original in terms of the volume of new things and what this looks like over the course of the next few years. mike i have to say i'm not up on the common lingo so apparently my super cycle was not original that other people have talked about super cycles but i thought i was being quite original in terms of the volume of new things and what this looks like over the course of the next few years I will say just broadly, I couldn't be more excited about the products that we are launching over the course of the next three years. i will say just broadly i couldn't be more excited about the products that we are launching over the course of the next three years I've been here 19 years. i've been here 19 years I have seen a welter of products we've launched since our earliest days of Cannulated Screws and small plates and screws, all of which have impact on kids' lives. i have seen a welter of products we've launched since our earliest days of cannulated screws and small plates and screws all of which have impact on kids' lives I would say we're finally to a point as a company where the types of devices we are launching are so clinically relevant and so needed, and I don't want to call them moonshots, but they're certainly more complex in terms of the pathway to get a product approval, both through FDA as well as surgeon adoption and products like 3P, eLLi, our VerteGlide system, the next generation of our Scoli system, Halo-Gravity Traction, you name it. There is just a huge volume of projects. Yeah, they're all coming starting very early here. We'll start to launch some projects here in the first half of the year that will impact us in second half. I think this is a 3+ year run for us of some of the most compelling, clinically significant products. I would say we're finally to a point as a company where the types of devices we are launching are so clinically relevant and so needed, and I don't want to call them moonshots, but they're certainly more complex in terms of the pathway to get a product approval, both through FDA as well as surgeon adoption and products like 3P, eLLi, our VerteGlide system, the next generation of our Scoli system, Halo-Gravity Traction, you name it. i would say we're finally to a point as a company where the types of devices we are launching are so clinically relevant and so needed and i don't want to call them moonshots but they're certainly more complex in terms of the pathway to get a product approval both through fda as well as surgeon adoption and products like 3p elli our verteglide system the next generation of our scoli system halo-gravity traction you name it There is just a huge volume of projects. there is just a huge volume of projects Yeah, they're all coming starting very early here. yeah they're all coming starting very early here We'll start to launch some projects here in the first half of the year that will impact us in second half. we'll start to launch some projects here in the first half of the year that will impact us in second half I think this is a 3+ year run for us of some of the most compelling, clinically significant products. i think this is a 3+ year run for us of some of the most compelling clinically significant products On the 3P side, we beta launched that at the end of last year, second half of last year. In the beta launch, I think we had, I don't know, 10 sets or less, so got a lot of feedback. The feedback has been extremely positive, and so we're hoping this summer to go kind of full tilt on the 3P Hip. I'd just remind you that 3P is a whole platform of plating products. Right now we've launched 3P Hip. On the 3P side, we beta launched that at the end of last year, second half of last year. on the 3p side we beta launched that at the end of last year second half of last year In the beta launch, I think we had, I don't know, 10 sets or less, so got a lot of feedback. in the beta launch i think we had i don't know 10 sets or less so got a lot of feedback The feedback has been extremely positive, and so we're hoping this summer to go kind of full tilt on the 3P Hip. the feedback has been extremely positive and so we're hoping this summer to go kind of full tilt on the 3p hip I'd just remind you that 3P is a whole platform of plating products. i'd just remind you that 3p is a whole platform of plating products Right now we've launched 3P Hip. right now we've launched 3p hip We've recently gotten approval for the 3P Small-Mini, and there's a series of additional systems that we'll launch off of this 3P platform. I think it's the most substantial thing we've done, from a R&D perspective, in the trauma and limb deformity business in our company's history. I think that we'll see that'll be borne out in revenue, particularly as we get into Q3 and Q4 and we have a reasonable volume of set inventory out there on the street. We've recently gotten approval for the 3P Small-Mini, and there's a series of additional systems that we'll launch off of this 3P platform. we've recently gotten approval for the 3p small-mini and there's a series of additional systems that we'll launch off of this 3p platform I think it's the most substantial thing we've done, from a R&D perspective, in the trauma and limb deformity business in our company's history. i think it's the most substantial thing we've done from a r&d perspective in the trauma and limb deformity business in our company's history I think that we'll see that'll be borne out in revenue, particularly as we get into Q3 and Q4 and we have a reasonable volume of set inventory out there on the street. i think that we'll see that'll be borne out in revenue particularly as we get into q3 and q4 and we have a reasonable volume of set inventory out there on the street

Speaker 3: Yeah, okay. Got it. Just with regard to 3P that you talked about, I know it's a comprehensive system kind of throughout the body, I guess. Maybe just highlight kind of the different versions that you have launched and what you still have coming. Yeah, okay. yeah okay Got it. got it Just with regard to 3P that you talked about, I know it's a comprehensive system kind of throughout the body, I guess. just with regard to 3p that you talked about i know it's a comprehensive system kind of throughout the body i guess Maybe just highlight kind of the different versions that you have launched and what you still have coming. maybe just highlight kind of the different versions that you have launched and what you still have coming

Speaker 1: Yep. So far, we have beta launched the 3P Hip. Full release is kind of in process, so we hope to have sets out in the market in the back half of Q2. 3P Hip is a comprehensive fracture and osteotomy system for pediatric hips. It builds on some of the LCB system we have, as well as the Locking Proximal Femur plate. I think it's, from a technological standpoint, just far more advanced. Surgeons can perform procedures that they hadn't been able to perform procedures before. It's also in a segment of pediatric orthopedics where some of the large competitors have more recently abandoned. It kind of enters into a space with almost no competition whatsoever. Yep. yep So far, we have beta launched the 3P Hip. so far we have beta launched the 3p hip Full release is kind of in process, so we hope to have sets out in the market in the back half of Q2. 3P Hip is a comprehensive fracture and osteotomy system for pediatric hips. full release is kind of in process so we hope to have sets out in the market in the back half of q2 3p hip is a comprehensive fracture and osteotomy system for pediatric hips It builds on some of the LCB system we have, as well as the Locking Proximal Femur plate. it builds on some of the lcb system we have as well as the locking proximal femur plate I think it's, from a technological standpoint, just far more advanced. i think it's from a technological standpoint just far more advanced Surgeons can perform procedures that they hadn't been able to perform procedures before. surgeons can perform procedures that they hadn't been able to perform procedures before It's also in a segment of pediatric orthopedics where some of the large competitors have more recently abandoned. it's also in a segment of pediatric orthopedics where some of the large competitors have more recently abandoned It kind of enters into a space with almost no competition whatsoever. it kind of enters into a space with almost no competition whatsoever I think the technology profile of 3P and how it's being used, particularly for very emergent trauma procedures where it is absolutely urgent that it's available to the surgeon, that's leading rapid adoption, I would say. We like the ASP. I think you've heard us talk about our efforts over the course of the last few years in R&D is to not only develop more clinically relevant products, but more cost-effective or cash-conservative types of systems. We see high ASP, high margin with a little less capital deployment required here. Our asset utilization metrics on 3P are, I would just say, dramatically better than what we had seen with some of our other plating systems. I think the technology profile of 3P and how it's being used, particularly for very emergent trauma procedures where it is absolutely urgent that it's available to the surgeon, that's leading rapid adoption, I would say. i think the technology profile of 3p and how it's being used particularly for very emergent trauma procedures where it is absolutely urgent that it's available to the surgeon that's leading rapid adoption i would say We like the ASP. we like the asp I think you've heard us talk about our efforts over the course of the last few years in R&D is to not only develop more clinically relevant products, but more cost-effective or cash-conservative types of systems. i think you've heard us talk about our efforts over the course of the last few years in r&d is to not only develop more clinically relevant products but more cost-effective or cash-conservative types of systems We see high ASP, high margin with a little less capital deployment required here. we see high asp high margin with a little less capital deployment required here Our asset utilization metrics on 3P are, I would just say, dramatically better than what we had seen with some of our other plating systems. our asset utilization metrics on 3p are i would just say dramatically better than what we had seen with some of our other plating systems Next will be the Small and Mini, so a whole host of anatomically appropriate plates for pediatric patients, some that not only we don't have but aren't available from any company in the world, specific to peds. We'll work on the 3P knee and femur system, which should come out probably, you're talking 2027. Beyond that, there's a series of kind of implant specific systems for specific indications throughout the body. This will be our bread and butter kind of plate and screw system for the next 10 years, I would say. Next will be the Small and Mini, so a whole host of anatomically appropriate plates for pediatric patients, some that not only we don't have but aren't available from any company in the world, specific to peds. next will be the small and mini so a whole host of anatomically appropriate plates for pediatric patients some that not only we don't have but aren't available from any company in the world specific to peds We'll work on the 3P knee and femur system, which should come out probably, you're talking 2027. we'll work on the 3p knee and femur system which should come out probably you're talking 2027 Beyond that, there's a series of kind of implant specific systems for specific indications throughout the body. beyond that there's a series of kind of implant specific systems for specific indications throughout the body This will be our bread and butter kind of plate and screw system for the next 10 years, I would say. this will be our bread and butter kind of plate and screw system for the next 10 years i would say

Speaker 3: Okay. Got it. Just on the fusion side, I think you've got a new kind of comprehensive pedicle screw or fusion system coming. Can you just talk about that and the timing and then how it compares to the RESPONSE system that you currently have? Okay. okay Got it. got it Just on the fusion side, I think you've got a new kind of comprehensive pedicle screw or fusion system coming. just on the fusion side i think you've got a new kind of comprehensive pedicle screw or fusion system coming Can you just talk about that and the timing and then how it compares to the RESPONSE system that you currently have? can you just talk about that and the timing and then how it compares to the response system that you currently have

Speaker 1: Yeah. RESPONSE has been out, you may know, we've probably had that out now 14 summers, so it has been around for a long time. Certainly, we've adapted it. We've expanded its opportunity with neuromuscular, with RESPONSE Rib and Pelvic. RESPONSE continues to grow, so it has been a hard one to kind of think about developing another system when it's grown so well. I think that there's certain techniques, more modern surgical techniques for scoliosis that allow for very complex vertebral body derotation, helping balance the spine more appropriately that I think surgeons are interested in. That system will accomplish that. Yeah. yeah RESPONSE has been out, you may know, we've probably had that out now 14 summers, so it has been around for a long time. response has been out you may know we've probably had that out now 14 summers so it has been around for a long time Certainly, we've adapted it. certainly we've adapted it We've expanded its opportunity with neuromuscular, with RESPONSE Rib and Pelvic. we've expanded its opportunity with neuromuscular with response rib and pelvic RESPONSE continues to grow, so it has been a hard one to kind of think about developing another system when it's grown so well. response continues to grow so it has been a hard one to kind of think about developing another system when it's grown so well I think that there's certain techniques, more modern surgical techniques for scoliosis that allow for very complex vertebral body derotation, helping balance the spine more appropriately that I think surgeons are interested in. i think that there's certain techniques more modern surgical techniques for scoliosis that allow for very complex vertebral body derotation helping balance the spine more appropriately that i think surgeons are interested in That system will accomplish that. that system will accomplish that It'll also be connected to an AI-based platform called 7D that will be able to give surgeons a very specific roadmap for what implants they're going to need and hopefully be able to run simulations to show surgeons what outcome they should get based on their choice of implants, where they choose to place those implants, what rod stiffnesses they use. It'll also be connected to an AI-based platform called 7D that will be able to give surgeons a very specific roadmap for what implants they're going to need and hopefully be able to run simulations to show surgeons what outcome they should get based on their choice of implants, where they choose to place those implants, what rod stiffnesses they use. it'll also be connected to an ai-based platform called 7d that will be able to give surgeons a very specific roadmap for what implants they're going to need and hopefully be able to run simulations to show surgeons what outcome they should get based on their choice of implants where they choose to place those implants what rod stiffnesses they use The new system also offers a whole host of different stiffness opportunities for surgeons with the rods, which has become a big hot topic. To be able to control the spine, you need very stiff but strong rods, and so that'll have that as well. I think just a host of very low profile implants that can accept large, strong rods with very, very complex derotation and rod reduction instrumentation. What we've done is also tried to develop the system in a personalized way. The new system also offers a whole host of different stiffness opportunities for surgeons with the rods, which has become a big hot topic. the new system also offers a whole host of different stiffness opportunities for surgeons with the rods which has become a big hot topic To be able to control the spine, you need very stiff but strong rods, and so that'll have that as well. to be able to control the spine you need very stiff but strong rods and so that'll have that as well I think just a host of very low profile implants that can accept large, strong rods with very, very complex derotation and rod reduction instrumentation. i think just a host of very low profile implants that can accept large strong rods with very very complex derotation and rod reduction instrumentation What we've done is also tried to develop the system in a personalized way. what we've done is also tried to develop the system in a personalized way We have seen so frequently when we bring our trays in to do a fusion procedure that at times upwards of 50% of the instruments and implants aren't used by a specific surgeon. They just don't need it because their technique is slightly different. What we're working towards is a customization of each set, so a surgeon can go through a whole host of different instrumentation and implants, and we can be very specific about building a set for that specific surgeon. We have seen so frequently when we bring our trays in to do a fusion procedure that at times upwards of 50% of the instruments and implants aren't used by a specific surgeon. we have seen so frequently when we bring our trays in to do a fusion procedure that at times upwards of 50% of the instruments and implants aren't used by a specific surgeon They just don't need it because their technique is slightly different. they just don't need it because their technique is slightly different What we're working towards is a customization of each set, so a surgeon can go through a whole host of different instrumentation and implants, and we can be very specific about building a set for that specific surgeon. what we're working towards is a customization of each set so a surgeon can go through a whole host of different instrumentation and implants and we can be very specific about building a set for that specific surgeon Obviously that drives some adoption, that drives down our costs obviously, and it helps the efficiency in the OR, particularly when you compare that to AI-based preoperative planning. Again, I think on the Scoli side, that comes on the heels of launch of VerteGlide, that comes on the heels of our first inpatient with eLLi. The success we've had over the course of the last 14-15 years in fusion, I think this just steps us up another level. Obviously that drives some adoption, that drives down our costs obviously, and it helps the efficiency in the OR, particularly when you compare that to AI-based preoperative planning. obviously that drives some adoption that drives down our costs obviously and it helps the efficiency in the or particularly when you compare that to ai-based preoperative planning Again, I think on the Scoli side, that comes on the heels of launch of VerteGlide, that comes on the heels of our first inpatient with eLLi. again i think on the scoli side that comes on the heels of launch of verteglide that comes on the heels of our first inpatient with elli The success we've had over the course of the last 14-15 years in fusion, I think this just steps us up another level. the success we've had over the course of the last 14-15 years in fusion i think this just steps us up another level

Speaker 3: Okay, great. You mentioned eLLi and VerteGlide. I did want to touch on the EOS category. Maybe just tell us more about VerteGlide and eLLi, where do they fit? eLLi, I know is probably the more complex product. When do you think you'll be able to launch that, and what is it going to take from a regulatory standpoint to get that through the FDA? Okay, great. okay great You mentioned eLLi and VerteGlide. you mentioned elli and verteglide I did want to touch on the EOS category. i did want to touch on the eos category Maybe just tell us more about VerteGlide and eLLi, where do they fit? eLLi, I know is probably the more complex product. maybe just tell us more about verteglide and elli where do they fit elli i know is probably the more complex product When do you think you'll be able to launch that, and what is it going to take from a regulatory standpoint to get that through the FDA? when do you think you'll be able to launch that and what is it going to take from a regulatory standpoint to get that through the fda

Speaker 1: Yeah. I would just say first with VerteGlide, we're in the process of starting to launch VerteGlide now. We did some cases in fourth quarter. They went well. We've done some cases here in Q1. We are extremely pleased with the outcomes we're seeing with VerteGlide. The demand for VerteGlide, I think is a little higher than we had suspected. Yeah. yeah I would just say first with VerteGlide, we're in the process of starting to launch VerteGlide now. i would just say first with verteglide we're in the process of starting to launch verteglide now We did some cases in fourth quarter. we did some cases in fourth quarter They went well. they went well We've done some cases here in Q1. we've done some cases here in q1 We are extremely pleased with the outcomes we're seeing with VerteGlide. we are extremely pleased with the outcomes we're seeing with verteglide The demand for VerteGlide, I think is a little higher than we had suspected. the demand for verteglide i think is a little higher than we had suspected We're in a spot where we got to get inventory to the street. They're all elective procedures, so we can manage them without a huge influx of inventory. We got sets coming in, and we've got surgeons trying to schedule cases that we've been able to shuffle the deck about every week, every day to make sure that we get cases covered. We're training a lot of surgeons, and we're going to have to get some sets out there to be able to extinguish the demand. We're in a spot where we got to get inventory to the street. we're in a spot where we got to get inventory to the street They're all elective procedures, so we can manage them without a huge influx of inventory. they're all elective procedures so we can manage them without a huge influx of inventory We got sets coming in, and we've got surgeons trying to schedule cases that we've been able to shuffle the deck about every week, every day to make sure that we get cases covered. we got sets coming in and we've got surgeons trying to schedule cases that we've been able to shuffle the deck about every week every day to make sure that we get cases covered We're training a lot of surgeons, and we're going to have to get some sets out there to be able to extinguish the demand. we're training a lot of surgeons and we're going to have to get some sets out there to be able to extinguish the demand It's very encouraging. What we're seeing with eLLi is it being used in locations where we have historically not had as strong of a presence with our fusion system, or maybe we were off contract. This is definitely propelling our fusion system as well, RESPONSE. That was the strategy. It's incredibly gratifying to help some of these kids, Mike. These are tiny kids. I mean, a lot of our patients we're treating are under four years old with, well, they're very bad deformities, and they need a treatment like this. Encouraging to see, and I think it's going to have a big impact, particularly back half of this year, eLLi, you're right. It's very encouraging. it's very encouraging What we're seeing with eLLi is it being used in locations where we have historically not had as strong of a presence with our fusion system, or maybe we were off contract. what we're seeing with elli is it being used in locations where we have historically not had as strong of a presence with our fusion system or maybe we were off contract This is definitely propelling our fusion system as well, RESPONSE. this is definitely propelling our fusion system as well response That was the strategy. that was the strategy It's incredibly gratifying to help some of these kids, Mike. it's incredibly gratifying to help some of these kids mike These are tiny kids. these are tiny kids I mean, a lot of our patients we're treating are under four years old with, well, they're very bad deformities, and they need a treatment like this. i mean a lot of our patients we're treating are under four years old with well they're very bad deformities and they need a treatment like this Encouraging to see, and I think it's going to have a big impact, particularly back half of this year, e LLi, you're right. encouraging to see and i think it's going to have a big impact particularly back half of this year, e lli you're right eLLi is a more complex pathway from a regulatory perspective, but we do have approval from the FDA to start to do procedures here. We think in probably first in-patient in Q4, and we can bill for those procedures, so that is always a positive. We're going to run a minimum of 50-patient study there, and we will probably back and forth with FDA in terms of after we do so many of these procedures and they go well, what's the endpoint before we can go live and start to expand? eLLi is a more complex pathway from a regulatory perspective, but we do have approval from the FDA to start to do procedures here. elli is a more complex pathway from a regulatory perspective but we do have approval from the fda to start to do procedures here We think in probably first in-patient in Q4, and we can bill for those procedures, so that is always a positive. we think in probably first in-patient in q4 and we can bill for those procedures so that is always a positive We're going to run a minimum of 50-patient study there, and we will probably back and forth with FDA in terms of after we do so many of these procedures and they go well, what's the endpoint before we can go live and start to expand? we're going to run a minimum of 50-patient study there and we will probably back and forth with fda in terms of after we do so many of these procedures and they go well what's the endpoint before we can go live and start to expand I think eLLi is more from a revenue perspective, a 2027-2028 story, at least in the United States. There is opportunities for us to launch eLLi in markets outside of the United States that will probably impact revenue a little bit sooner. We are on a good path and very excited about first inpatient here in this year. I think eLLi is more from a revenue perspective, a 2027-2028 story, at least in the United States. i think elli is more from a revenue perspective a 2027-2028 story at least in the united states There is opportunities for us to launch eLLi in markets outside of the United States that will probably impact revenue a little bit sooner. there is opportunities for us to launch elli in markets outside of the united states that will probably impact revenue a little bit sooner We are on a good path and very excited about first inpatient here in this year. we are on a good path and very excited about first inpatient here in this year

Speaker 3: Okay. ApiFix. It's been a few years since you launched that. Maybe give an update there and where does that kind of fit? I guess that's not EOS per se, but where does that fit relative to some of your other products? Okay. okay ApiFix. apifix It's been a few years since you launched that. it's been a few years since you launched that Maybe give an update there and where does that kind of fit? maybe give an update there and where does that kind of fit I guess that's not EOS per se, but where does that fit relative to some of your other products? i guess that's not eos per se but where does that fit relative to some of your other products

Speaker 1: Yeah. I mean, when you think about ApiFix and you think about our aspiration to take care of the entire continuum of care in Scoli. Now that we got scoliosis bracing, you start with bracing, then you may move to a non-fusion opportunity with ApiFix, and that's what we're seeing. We've got the Early Onset Scoliosis for these more congenital complex procedures, and then you move to fusion. I think the portfolio is, over the course of the next few years, as robust and as complete as any company in the history of pediatric spine surgery. Yeah. yeah I mean, when you think about ApiFix and you think about our aspiration to take care of the entire continuum of care in Scoli. i mean when you think about apifix and you think about our aspiration to take care of the entire continuum of care in scoli Now that we got scoliosis bracing, you start with bracing, then you may move to a non-fusion opportunity with ApiFix, and that's what we're seeing. now that we got scoliosis bracing you start with bracing then you may move to a non-fusion opportunity with apifix and that's what we're seeing We've got the Early Onset Scoliosis for these more congenital complex procedures, and then you move to fusion. we've got the early onset scoliosis for these more congenital complex procedures and then you move to fusion I think the portfolio is, over the course of the next few years, as robust and as complete as any company in the history of pediatric spine surgery. i think the portfolio is over the course of the next few years as robust and as complete as any company in the history of pediatric spine surgery I think ApiFix is-- what we are seeing with ApiFix is as the results of our study come in, I think surgeons are narrowing their indications. There is a certain segment of the patient population where ApiFix works extremely well, and that was the goal of the study, which is the highest probability patient to avoid fusion. We have seen extremely low fusion rates across the entire indications, but certainly very low revision rates and low fusion rates in a kind of a more narrow band. I think ApiFix is-- what we are seeing with ApiFix is as the results of our study come in, I think surgeons are narrowing their indications. i think apifix is-- what we are seeing with apifix is as the results of our study come in i think surgeons are narrowing their indications There is a certain segment of the patient population where ApiFix works extremely well, and that was the goal of the study, which is the highest probability patient to avoid fusion. there is a certain segment of the patient population where apifix works extremely well and that was the goal of the study which is the highest probability patient to avoid fusion We have seen extremely low fusion rates across the entire indications, but certainly very low revision rates and low fusion rates in a kind of a more narrow band. we have seen extremely low fusion rates across the entire indications but certainly very low revision rates and low fusion rates in a kind of a more narrow band What we're seeing is that more surgeons adopting ApiFix, but in a more selective approach, which is kind of where this is going. Again, super high ASP for us, really good margins, really good asset utilization, and more and more surgeons using it. Not going to be $100 million product line for us, but certainly it is a perfect fit within our scoliosis portfolio. You're right, it isn't EOS, but there are surgeons who are using it as a tool even in that patient population. What we're seeing is that more surgeons adopting ApiFix, but in a more selective approach, which is kind of where this is going. what we're seeing is that more surgeons adopting apifix but in a more selective approach which is kind of where this is going Again, super high ASP for us, really good margins, really good asset utilization, and more and more surgeons using it. again super high asp for us really good margins really good asset utilization and more and more surgeons using it Not going to be $100 million product line for us, but certainly it is a perfect fit within our scoliosis portfolio. not going to be $100 million product line for us but certainly it is a perfect fit within our scoliosis portfolio You're right, it isn't EOS, but there are surgeons who are using it as a tool even in that patient population. you're right it isn't eos but there are surgeons who are using it as a tool even in that patient population

Speaker 3: Okay. All right. Just want to move on to some more financially oriented questions. Last year, I think it was the third quarter, you had some challenges in the Latin American business and with some replacements. What did you learn from that, and what are you doing to avoid those sorts of issues in the future? Okay. okay All right. all right Just want to move on to some more financially oriented questions. just want to move on to some more financially oriented questions Last year, I think it was the third quarter, you had some challenges in the Latin American business and with some replacements. last year i think it was the third quarter you had some challenges in the latin american business and with some replacements What did you learn from that, and what are you doing to avoid those sorts of issues in the future? what did you learn from that and what are you doing to avoid those sorts of issues in the future

Speaker 2: Yeah, absolutely. Great question. Specifically the Latin America, it comes down to set sales. As we're selling sets at our cost, no margin, into our stocking distributors, the timing of those creates a lumpiness. What we've done is in the fall, last fall, November of 2025, we have purchased Our largest distributor in Brazil, we have about 15 or 16 distributors down there. We've purchased our largest distributor, and so now we've transitioned from a pure distributor model to a direct ownership model that's selling directly to the hospitals. Yeah, absolutely. yeah absolutely Great question. great question Specifically the Latin America, it comes down to set sales. specifically the latin america it comes down to set sales As we're selling sets at our cost, no margin, into our stocking distributors, the timing of those creates a lumpiness. as we're selling sets at our cost no margin into our stocking distributors the timing of those creates a lumpiness What we've done is in the fall, last fall, November of 2025, we have purchased Our largest distributor in Brazil, we have about 15 or 16 distributors down there. what we've done is in the fall last fall november of 2025 we have purchased our largest distributor in brazil we have about 15 or 16 distributors down there We've purchased our largest distributor, and so now we've transitioned from a pure distributor model to a direct ownership model that's selling directly to the hospitals. we've purchased our largest distributor and so now we've transitioned from a pure distributor model to a direct ownership model that's selling directly to the hospitals It improves our visibility, it improves our cash flow collections, which is a huge impact for us, and allows us more of a normalized ordering pattern as surgeries are happening, as opposed to lumpiness of sales of sets. It positions us for more sustainable growth in Brazil over time, kind of takes us from wholesale to retail sales, if you will. Very positive move for us in the fall of last year, and we look forward to that smoothing things out for us going forward. We also, on the 7D side of things, that's a capital sale, tons of demand from the surgeon. It improves our visibility, it improves our cash flow collections, which is a huge impact for us, and allows us more of a normalized ordering pattern as surgeries are happening, as opposed to lumpiness of sales of sets. it improves our visibility it improves our cash flow collections which is a huge impact for us and allows us more of a normalized ordering pattern as surgeries are happening as opposed to lumpiness of sales of sets It positions us for more sustainable growth in Brazil over time, kind of takes us from wholesale to retail sales, if you will. it positions us for more sustainable growth in brazil over time kind of takes us from wholesale to retail sales if you will Very positive move for us in the fall of last year, and we look forward to that smoothing things out for us going forward. very positive move for us in the fall of last year and we look forward to that smoothing things out for us going forward We also, on the 7D side of things, that's a capital sale, tons of demand from the surgeon. we also on the 7d side of things that's a capital sale tons of demand from the surgeon As Dave mentioned, radiation-free navigation system, so the surgeons all love it. Difficult to work through all of the legal documentation with the hospitals. Sometimes they have a different timeframe than we do. Doesn't always match up exactly with our quarter end, if you will. That, in the past, has created some lumpiness in our sales. What we did back in the third quarter is we removed any anticipated growth from that business out of our guidance. As Dave mentioned, radiation-free navigation system, so the surgeons all love it. as dave mentioned radiation-free navigation system so the surgeons all love it Difficult to work through all of the legal documentation with the hospitals. difficult to work through all of the legal documentation with the hospitals Sometimes they have a different timeframe than we do. sometimes they have a different timeframe than we do Doesn't always match up exactly with our quarter end, if you will. doesn't always match up exactly with our quarter end if you will That, in the past, has created some lumpiness in our sales. that in the past has created some lumpiness in our sales What we did back in the third quarter is we removed any anticipated growth from that business out of our guidance. what we did back in the third quarter is we removed any anticipated growth from that business out of our guidance That eliminates some of the lumpiness from our revenue forecast going forward. Again, tons of demand for the product. We're going to continue to sell that product, but the timing of it can come and go in different months and different quarters. To eliminate that lumpiness in our forecast, at least, we've just removed that piece of the cycle. We think we are in a very good place in both of these challenges that we had last year, for 2026 and beyond. That eliminates some of the lumpiness from our revenue forecast going forward. that eliminates some of the lumpiness from our revenue forecast going forward Again, tons of demand for the product. again tons of demand for the product We're going to continue to sell that product, but the timing of it can come and go in different months and different quarters. we're going to continue to sell that product but the timing of it can come and go in different months and different quarters To eliminate that lumpiness in our forecast, at least, we've just removed that piece of the cycle. to eliminate that lumpiness in our forecast at least we've just removed that piece of the cycle We think we are in a very good place in both of these challenges that we had last year, for 2026 and beyond. we think we are in a very good place in both of these challenges that we had last year for 2026 and beyond

Speaker 3: Okay. Just with regard to gross margin, what's the outlook there? You've got some moving pieces in terms of OPSB, the implants, you've got some higher margin implants. You're launching EOS. You're also growing pretty rapidly outside the U.S., which is probably lower gross margin. I think your margin was up last year. I can't remember what you guided to this year, but just thinking over the next few years, is it going to be flat, up, down generally? Okay. okay Just with regard to gross margin, what's the outlook there? just with regard to gross margin what's the outlook there You've got some moving pieces in terms of OPSB, the implants, you've got some higher margin implants. you've got some moving pieces in terms of opsb the implants you've got some higher margin implants You're launching EOS. you're launching eos You're also growing pretty rapidly outside the U.S., which is probably lower gross margin. you're also growing pretty rapidly outside the u.s which is probably lower gross margin I think your margin was up last year. i think your margin was up last year I can't remember what you guided to this year, but just thinking over the next few years, is it going to be flat, up, down generally? i can't remember what you guided to this year but just thinking over the next few years is it going to be flat up down generally

Speaker 2: Yeah, it's a great point. A lot of moving pieces, to your point. We did improve margins slightly, half a basis point in 2025, about 73% for the full year of 2025, and that's where I've indicated it should be in 2026 and 2027. OPSB growing faster does put a little pressure on it. Going to retail in Brazil helps that improve our margins. As you said, these new product launches, small today, but as they grow, they will come in at higher gross margins as well, which definitely helps offset a little bit of the OPSB pressure that we're seeing. You mix all that together, and we've got plans in place to maintain that kind of 73% for the next couple of years. Yeah, it's a great point. yeah it's a great point A lot of moving pieces, to your point. a lot of moving pieces to your point We did improve margins slightly, half a basis point in 2025, about 73% for the full year of 2025, and that's where I've indicated it should be in 2026 and 2027. we did improve margins slightly half a basis point in 2025 about 73% for the full year of 2025 and that's where i've indicated it should be in 2026 and 2027 OPSB growing faster does put a little pressure on it. opsb growing faster does put a little pressure on it Going to retail in Brazil helps that improve our margins. going to retail in brazil helps that improve our margins As you said, these new product launches, small today, but as they grow, they will come in at higher gross margins as well, which definitely helps offset a little bit of the OPSB pressure that we're seeing. as you said these new product launches small today but as they grow they will come in at higher gross margins as well which definitely helps offset a little bit of the opsb pressure that we're seeing You mix all that together, and we've got plans in place to maintain that kind of 73% for the next couple of years. you mix all that together and we've got plans in place to maintain that kind of 73% for the next couple of years

Speaker 3: Okay. In terms of set placements, you're planning, I think, $10 million for this year, and it's down from $17 million last year and $20 million the year before. It's kind of a double-edged sword, I guess, because on the one hand, it's good for cash flow, but on the other hand, I think people may be a little reading into it that it's not a positive indicator. I know that's not the case, but maybe you can explain why you don't need to spend as much on sets right now? Okay. okay In terms of set placements, you're planning, I think, $10 million for this year, and it's down from $17 million last year and $20 million the year before. in terms of set placements you're planning i think $10 million for this year and it's down from $17 million last year and $20 million the year before It's kind of a double-edged sword, I guess, because on the one hand, it's good for cash flow, but on the other hand, I think people may be a little reading into it that it's not a positive indicator. it's kind of a double-edged sword i guess because on the one hand it's good for cash flow but on the other hand i think people may be a little reading into it that it's not a positive indicator I know that's not the case, but maybe you can explain why you don't need to spend as much on sets right now? i know that's not the case but maybe you can explain why you don't need to spend as much on sets right now

Speaker 2: Yeah, absolutely. Three years ago, it was revenue at all costs, and as Dave said, we've changed that a bit to be aggressive revenue, but improving Adjusted EBITDA and dramatic improvements on the cash flow. Getting to positive cash, free cash flow in the fourth quarter of last year was a big deal. We'll be negative here in the first half of this year because of set deployment, but definitely getting to free cash flow breakeven, maybe even slightly positive in 2026. Improved EBITDA is a piece of that. The second piece of that is reduced deployment of sets from $17 in 2025 down to $10 in 2026, and then improved working capital performance. Yeah, absolutely. yeah absolutely Three years ago, it was revenue at all costs, and as Dave said, we've changed that a bit to be aggressive revenue, but improving Adjusted EBITDA and dramatic improvements on the cash flow. three years ago it was revenue at all costs and as dave said we've changed that a bit to be aggressive revenue but improving adjusted ebitda and dramatic improvements on the cash flow Getting to positive cash, free cash flow in the fourth quarter of last year was a big deal. getting to positive cash free cash flow in the fourth quarter of last year was a big deal We'll be negative here in the first half of this year because of set deployment, but definitely getting to free cash flow breakeven, maybe even slightly positive in 2026. we'll be negative here in the first half of this year because of set deployment but definitely getting to free cash flow breakeven maybe even slightly positive in 2026 Improved EBITDA is a piece of that. improved ebitda is a piece of that The second piece of that is reduced deployment of sets from $17 in 2025 down to $10 in 2026, and then improved working capital performance. the second piece of that is reduced deployment of sets from $17 in 2025 down to $10 in 2026 and then improved working capital performance On the sets specifically, if you look at the efficiency, the revenue we're going to generate from this $10 million set deployment in 2026, it's all brand-new products, effectively, as opposed to legacy systems. As Dave mentioned, we're getting higher prices, lower set costs on these new technologies. Effectively, with this $10 million of deployment in 2026, it's probably the same revenue growth equivalent of $20 million about four or five years ago when we were deploying that amount of capital. On the sets specifically, if you look at the efficiency, the revenue we're going to generate from this $10 million set deployment in 2026, it's all brand-new products, effectively, as opposed to legacy systems. on the sets specifically if you look at the efficiency the revenue we're going to generate from this $10 million set deployment in 2026 it's all brand-new products effectively as opposed to legacy systems As Dave mentioned, we're getting higher prices, lower set costs on these new technologies. as dave mentioned we're getting higher prices lower set costs on these new technologies Effectively, with this $10 million of deployment in 2026, it's probably the same revenue growth equivalent of $20 million about four or five years ago when we were deploying that amount of capital. effectively with this $10 million of deployment in 2026 it's probably the same revenue growth equivalent of $20 million about four or five years ago when we were deploying that amount of capital It's double, or maybe a little better in some cases, of our legacy system on the return on investment revenue to investment dollars. Very excited about that, and it has very significant clinical unmet needs and includes premium pricing, which helps the gross margin, helps our return on asset, and helps our free cash flow utilization improve dramatically. We're excited to see that not only in 2026, but in 2027 and 2028 as well. It's double, or maybe a little better in some cases, of our legacy system on the return on investment revenue to investment dollars. it's double or maybe a little better in some cases of our legacy system on the return on investment revenue to investment dollars Very excited about that, and it has very significant clinical unmet needs and includes premium pricing, which helps the gross margin, helps our return on asset, and helps our free cash flow utilization improve dramatically. very excited about that and it has very significant clinical unmet needs and includes premium pricing which helps the gross margin helps our return on asset and helps our free cash flow utilization improve dramatically We're excited to see that not only in 2026, but in 2027 and 2028 as well. we're excited to see that not only in 2026 but in 2027 and 2028 as well

Speaker 3: Okay, just final question. I know you've done a fair bit of M&A over the years, but it does seem like you've got a pretty comprehensive offering, at least in orthopedics at this point. One, would you look at doing any additional M&A in orthopedics? Two, I think you've talked about starting to branch out of orthopedics into other pediatric medical devices. Would that be something where we're more likely to maybe see some M&A outside of the orthopedics area? Okay, just final question. okay just final question I know you've done a fair bit of M&A over the years, but it does seem like you've got a pretty comprehensive offering, at least in orthopedics at this point. i know you've done a fair bit of m&a over the years but it does seem like you've got a pretty comprehensive offering at least in orthopedics at this point One, would you look at doing any additional M&A in orthopedics? one would you look at doing any additional m&a in orthopedics Two, I think you've talked about starting to branch out of orthopedics into other pediatric medical devices. two i think you've talked about starting to branch out of orthopedics into other pediatric medical devices Would that be something where we're more likely to maybe see some M&A outside of the orthopedics area? would that be something where we're more likely to maybe see some m&a outside of the orthopedics area

Speaker 1: Yeah, I think that we would still be interested in acquisitions within pediatrics, particularly maybe you would see us continue on the OPSB side, where there's opportunities for products, and certainly interested on continuing acquisition on the clinic expansion side. I think from an implant standpoint, it's pretty hard to see that. Yeah, I think that we would still be interested in acquisitions within pediatrics, particularly maybe you would see us continue on the OPSB side, where there's opportunities for products, and certainly interested on continuing acquisition on the clinic expansion side. yeah i think that we would still be interested in acquisitions within pediatrics particularly maybe you would see us continue on the opsb side where there's opportunities for products and certainly interested on continuing acquisition on the clinic expansion side I think from an implant standpoint, it's pretty hard to see that. i think from an implant standpoint it's pretty hard to see that There's not really any other pediatric orthopedic assets that we're aware of, at least at this stage. To answer your question about expanding, I think the aspiration over time is to continue to be able to surround the pediatric surgeon and the children's hospital with all the devices that they could use, and to be able to leverage our commercial channel and our infrastructure in other pediatric subspecialties. There's not really any other pediatric orthopedic assets that we're aware of, at least at this stage. there's not really any other pediatric orthopedic assets that we're aware of at least at this stage To answer your question about expanding, I think the aspiration over time is to continue to be able to surround the pediatric surgeon and the children's hospital with all the devices that they could use, and to be able to leverage our commercial channel and our infrastructure in other pediatric subspecialties. to answer your question about expanding i think the aspiration over time is to continue to be able to surround the pediatric surgeon and the children's hospital with all the devices that they could use and to be able to leverage our commercial channel and our infrastructure in other pediatric subspecialties Certainly not going to happen overnight, but I think you could expect that when we do that, if we get more aggressive, it would probably be through acquisition. If you've seen us in the past, we didn't start OPSB ground up. We started with MD Orthopaedics, a well-known name, and then we built off of and grew off of that. I think that playbook would probably be what you'll see when we start to expand into other subspecialties. Certainly not going to happen overnight, but I think you could expect that when we do that, if we get more aggressive, it would probably be through acquisition. certainly not going to happen overnight but i think you could expect that when we do that if we get more aggressive it would probably be through acquisition If you've seen us in the past, we didn't start OPSB ground up. if you've seen us in the past we didn't start opsb ground up We started with MD Orthopaedics, a well-known name, and then we built off of and grew off of that. we started with md orthopaedics a well-known name and then we built off of and grew off of that I think that playbook would probably be what you'll see when we start to expand into other subspecialties. i think that playbook would probably be what you'll see when we start to expand into other subspecialties

Speaker 3: All right. Well, that was my last question. I don't see any questions from participants. I think we're going to have to wrap up there. Thanks, guys. Appreciate it. Hope you have some good meetings today. All right. all right Well, that was my last question. well that was my last question I don't see any questions from participants. i don't see any questions from participants I think we're going to have to wrap up there. i think we're going to have to wrap up there Thanks, guys. thanks guys Appreciate it. appreciate it Hope you have some good meetings today. hope you have some good meetings today

Speaker 1: Great. Thanks, Mike. I appreciate you. Great. great Thanks, Mike. I appreciate you. thanks mike. i appreciate you

Speaker 2: Thanks, Mike. Appreciate it. Thanks, Mike. thanks mike Appreciate it. appreciate it