Orthofix Medical Inc. (NASDAQ:OFIX) Q4 2022 Earnings Call Transcript

Jeffrey Cohen: Okay, got it. That does it for us. Thanks for taking the questions.

Operator: Our next question comes from Dave Turkaly from JMP Securities. Please go ahead. Your line is open.

Dave Turkaly: Hi, good evening, guys. Maybe one for Bos. I don’t want to put them on the spot here, but like I guess what I’m trying to look at here is either range or targeted area for either free cash flow or earnings. I imagine you’re not going to want to comment on that and I understand, but how about even timing, like when do you think we’ll be ready to, sort of put this together and have sort of directionally some bottom line targets as well?

John Bostjancic: Yes, clearly a focus for the first quarter to be able to get through the integration and now we’re running our annual operating plan for the combined company and digesting the synergies going through what we built into the deal model. So, I think we have a good sense at a high level and talk about some high level financial metrics and expectations that we’re built into the deal model. But yes, we’re just not in a position to give any kind of clarity beyond the top line because we’re still working through that first combined company operating plan, but I suspect we’ll be in a better position to give more color down the P&L and in terms of big picture cash flow on our first quarter call in early May.

Dave Turkaly: Got it. And then I know that both the companies have worked on the commercial, you know expanding the teams. I think Spine said, they focus on larger distributors of late. Will you guys combined be able to take advantage of all the changes you’ve made both on the Orthofix and the SeaSpine side? I think you said, not a lot of overlap, but even some of these new changes, would that be true that you’ll be able to maintain some of the new choices you’ve made both sides?

Keith Valentine: I do. I think that there’s even opportunities we’re already in some discussion of current territories that even there’s light overlap and how they can combine together. I think there’s been €“ I think we’re fortunate that we have a distribution teams that are excited about what the company’s new portfolio is and how broad it is. And they want to be part of this growth profile. So, I do feel very comfortable that the continued innovation will drive excitement for them as well because they see the future. They see the future as not just what the company looks like today, but we have a 2-year to 3-year plan of even more innovation that will be exciting for the marketplace.

Dave Turkaly: And maybe one last one, if I could squeeze one in, you mentioned on the SeaSpine part, the exit from Europe, and I know for Orthofix it’s been, you know, some of the legacy sort of a geography with that certainly at least in Italy and some other places was important. Is that when you combine, do you wind-up Orthofix still stays there and you cross-sell with them or what are your thoughts on Europe specifically if you had just recently, I think exited at least for some of your products?

Keith Valentine: Yes. I think Europe is a complicated challenge right now to be frank. There’s a lot of regulation. Some of it’s getting pushed down the road, but still creates a great deal of, I would say, not even additional, it’s dramatic expense to how you’re going to promote and be able to market a product and sell a product in Europe. I think we’re very fortunate that the traditional orthopedic business based out of has been in place for a very long time and they’re in a different situation than I would categorize what spinal implants specifically has to deal with. And so, we’ll continue to evaluate. We’ll continue to evaluate how the European regulatory groups drive forward with some new plans that they’re promising. But at this time, we wanted to be a cost effective, a profitable venture for Spinal Implants in Europe and we’ll continue to pursue it in such a way.