Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orthofix Medical Inc (OFIX, Financial) reported a 7.5% year-over-year increase in net revenue for the first quarter, reaching $139 million, driven by strong growth across its U.S. business segments.
- The company achieved significant growth in its Spine Fixation and Orthopedics segments, with respective increases of 16% and 23%, indicating robust market performance and effective execution of strategic initiatives.
- Orthofix Medical Inc (OFIX) saw a notable improvement in its adjusted EBITDA margin, which increased by more than 200 basis points, reflecting efficient cost management and synergy realization.
- The company is expanding its distribution network and deepening penetration into existing accounts, which is expected to sustain revenue growth and enhance market share.
- Orthofix Medical Inc (OFIX) is investing in new technologies and innovations, with several promising products in development, aiming to establish leadership in high-potential markets.
Negative Points
- Despite overall growth, the international business of Orthofix Medical Inc (OFIX) saw a decline of 2.7% due to timing issues with orders from stocking distributors, indicating potential volatility in international markets.
- The company reported a slight decrease in non-GAAP adjusted gross margins, down by approximately 40 basis points compared to the previous year, primarily due to vendor overlaps.
- Orthofix Medical Inc (OFIX) experienced its highest quarter of cash burn during Q1, primarily due to annual incentive and one-time merger-related payments.
- There are ongoing challenges with product development spend and increased clinical spending, which could impact the financial performance if not managed effectively.
- While the company is narrowing its full-year revenue guidance and showing positive projections, there remains uncertainty in achieving these targets, especially with potential foreign exchange rate fluctuations.
Q & A Highlights
Q: From maybe the first question and I hate to nitpick here. But dumb guidance for the year is up about $2 million to $3 million midpoint to midpoint versus the four to $5 million 1Q be. I appreciate it's early in the year. I sense conservatism, but just want to make sure you're not seeing anything different here in 2Q and maybe you tempered your momentum?
A: No, we wouldn't we're not seeing anything that would temper our momentum. We're you know, again, it's early in the year. We want to our new management team in place and we are confident in what we're delivering. But nothing that tempering our enthusiasm.
Q: Great. That's what I figured. And then just maybe a housekeeping question. Did you have one fewer day selling day in the first quarter versus 2023, some of your peers have. So I'm just curious to know your calendar now.
A: No.
Q: Okay. Okay. And then I guess my last question. And Julie, you sort of alluded to it. I was hoping maybe get some firmer numbers, but you gave a great metric in the fourth quarter that 8% of sales were from new distributors. You mentioned that continued. Any chance you can can update that number similar to last quarter higher. And I appreciate you may not have this at hand.
A: Okay. I'll say in the revenue from new distributors, I said in the prepared remarks that it nearly doubled and so you can interpret that from the 8% to nearly doubling and then I don't know, same-store sales at the ready in front of me, but I think we will think about really if we land release there.
Q: Hi, good morning, guys. This is Izzy on for Ryan. So just first off on the gross margins. It looks like you guys came in in line with our estimates this quarter. Were just wondering what you could see that could drive them higher over time?
A: Yes. So over. I mean, this year, we've said that our margins would be 71% in line with last year. I think as we look to the future, we haven't issued long-range guidance on it, but we do see opportunity in the gross margin line. I think there's synergies with supplier rationalization, leveraging our footprint and those types of things that work.
Q: Okay, great. Thank you. And then next on the bone stim, it looks like you guys are seeing some pretty strong growth here. Just wondering what you can do to maintain this growth in a market that's maybe growing not as fast?
A: Yes, it's an excellent question. Look, we see for the foreseeable future are great potential. Just given that from what we said during our remarks about now we are leveraging it as much as we can right now, all of the new surgeons coming from the SeaSpine acquisition. So as said, is true that the market growth or market rates. But if you confine that I can the business in our domain, we see strong potential, as I said, for the next for the next few quarters.
Q: Cai, thanks for taking the questions. Just on the growth rates we saw this quarter, especially I mean, you kind of mentioned for global orthopedics, it's going to vary on the spine growth has been or the with the spine growth been pretty nice. Is that something we should expect to continue for the rest of the year? Or could you comment on sort of what the trends are for the remaining other businesses?
A: Yes. Look, I we feel pretty confident about the growth rate that we're achieving right now. As we said earlier, we are clearly identify a couple of the grocery growth driver for us. One, yes, we are getting a lot of interest from a new distributor or a new surgeons, the amount of inbound calls that are coming, it has been pretty remarkable for us. And all of these allow us to really pick and choose the right partner for that because remember, we are fully focused on profitable growth. So and we can achieve these if we get the right partners.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
