OrthoPediatrics Corp. (NASDAQ:KIDS) Q2 2025 Earnings Call Transcript

OrthoPediatrics Corp. (NASDAQ:KIDS) Q2 2025 Earnings Call Transcript August 5, 2025

OrthoPediatrics Corp. beats earnings expectations. Reported EPS is $-0.11, expectations were $-0.17.

Operator: Good afternoon, and welcome to OrthoPediatric Corporation’s (sic) [ OrthoPediatrics Corporation’s ] Second Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Hannah Jeffrey from the Gilmartin Group for a few introductory comments. Please begin.

Hannah Jeffrey:

The Gilmartin Group: Thank you for joining today’s call. With me from the company are: Dave Bailey, President and Chief Executive Officer; and Fred Hite, Chief Operating and Financial Officer. Before we begin today, let me remind you that the company’s remarks include forward-looking statements within the meaning of federal securities laws, including the safe harbor provisions for Private Securities Litigation Reform Act of 1995. These forward- looking statements are subject to numerous risks and uncertainties, and the company’s actual results may differ materially. For a discussion of risk factors, I encourage you to review the company’s most recent annual report on Form 10-K, which was filed with the SEC on March 5, 2025, and its subsequent quarterly reports on Form 10-Q.

During the call today, management will also discuss certain non-GAAP financial measures, which are supplemental measures of performance. The company believes these measures provide useful information for investors in evaluating its operations period-over- period. For each non-GAAP financial measure referenced on this call, the company has included a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP financial measures in its second quarter earnings release. Please note that the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for OrthoPediatrics’ financial results prepared in accordance with GAAP. In addition, the content of this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, August 5, 2025.

Except as required by law, the company undertakes no obligation to revise or update any statements to reflect events or circumstances taking place after the date of this call. With that, I would like to turn the call over to Dave Bailey, President and Chief Executive Officer.

David R. Bailey: Thanks, Hannah. Good afternoon, everyone, and thank you for joining us on our second quarter 2025 conference call. As always, I want to start by highlighting the metric we’re most proud of. In the second quarter alone, we helped treat over 37,000 children, bringing our total impact to over 1,217,000 kids since inception. For far too long, pediatric patients and health care providers have lacked appropriate support in meeting the major unmet needs in pediatric health care. OP remains deeply committed to changing that, and we’re well on our way. Q2 2025 was another strong quarter for OrthoPediatrics, highlighted by record revenue that generated global growth of 16% and exceptionally high procedure and clinic volumes in June that remained strong in July.

With 2 of our busiest summer months now behind us, we are pleased with our momentum and increasingly confident in another outstanding year. Growth was driven by market share gains across all businesses with standout performances in Scoliosis, Trauma, 7D and our Nonsurgical Specialty Bracing business, or OPSB. International sales were also solid, fueled by strong surgical demand in Europe and the Middle East, Scoliosis set sales to stocking distributors, offset by lower Trauma and Deformity set sales in Brazil. OPSB continues to gain momentum as we expand the franchise’s footprint through increasing product sales such as DF2 and execution of our clinic expansion strategy. Just this morning, we announced several milestones achieved through July, including multiple U.S. Acquihire and greenfield clinic openings and our first international clinic in Ireland and expect additional expansion throughout the second half of the year.

Beyond OPSB, our Scoliosis and Trauma Implant systems continue to aggressively take market share with revenue growing very rapidly, which we expect to continue in H2 and throughout 2026. We are pleased with the way things are progressing on the revenue and share-taking front, and we are clearly bullish about the year. We expect our business to continue to gain momentum throughout 2025 based on our success scaling OPSB, driving market share gains through leveraging existing set deployments and the ongoing success of our innovative product launches. Beyond revenue, we remain on track to meet our adjusted EBITDA goals, which will fully pay for our 2025 set deployment and lead to positive free cash flow generation in Q4 of this year and full year free cash flow breakeven in 2026.

All of this, combined with the earlier mentioned strong start to our summer selling season and the momentum we’ve built over the last several quarters gives us confidence in an extremely successful second half and full year 2025, which will also set us up well for 2026 and beyond. Given these facts, we are raising our revenue guidance range from $236 million to $242 million to $237 million to $242 million, and we continue to expect to produce $15 million to $17 million in adjusted EBITDA and to generate our first quarter of positive free cash flow in Q4 of 2025. In the second quarter of 2025, the T&D business grew 10% as we continue to deliver strong market share gains across multiple product lines. Overall growth in the quarter was led by strength from U.S. Trauma, PNP Femur and Tibia, cannulated screws, OPSB and DF2, slightly offset by slow case scheduling in elective limb deformity early in the quarter and lower T&D set sales to Brazil.

This quarter’s performance was fueled by past investments in set allocation, surgeon education and new product adoption, leading to strong share gains across the T&D portfolio. Significant set deployments in 2023 and 2024 continue to translate into increased utilization and meaningful growth. Trauma saw particularly strong revenue gains driven by rapid adoption of PNP Tibia, cannulated screws and DF2. We also launched additional PNP Tibia sets this quarter with more to follow, positioning it as a key growth driver for the foreseeable future. Additionally, we have recently received FDA approval for sterile products, which will start to positively impact set deployment dollars due to increased efficiency with the first sterile product set to release in the second half of 2025.

Further, DF2 continues to outperform expectations with rapid surgeon adoption and growing demand. As this product is quickly becoming the new standard of care, we continue to see support from the industry. A recent publication in JPOSNA highlighted positive DF2 study results. These results demonstrated similar short-term clinical outcomes compared to spica casting while significantly reducing hospital admissions, length of stay and need for general anesthesia. This study replicates previously presented work that the DF2 brace represents an attractive alternative for managing pediatric femoral shaft fractures while optimizing health care resource utilization without compromising treatment efficiency. The study continues to amplify the value proposition for the DF2, and we are seeing that play out in reality with surgeons as well, thus creating a new standard of care.

Looking at our 3P platform, following FDA approval of the 3P Pediatric Plating Platform Hip system, which we announced last quarter, we just announced the completion of our first surgical case last week and are gearing up for more cases throughout the balance of the year. We anticipate this will create a nice headwind for the remainder of 2025 and 2026. The next 3P system, 3P Small and Mini, is on track to be submitted to the FDA in the coming months. Just as a reminder, 3P is a series of systems designed to be the most innovative and comprehensive plating portfolio in pediatric orthopedic history, and we expect to launch a few new systems each year for the next several years, bolstering both trauma and limb deformity revenue. T&D continues to be a key driver of our performance as we leverage our scale, gain market share and launch innovative products that meet unmet needs and fuel sustained growth.

Our path to market dominance in T&D is well defined. Our OPSB strategy also continues to advance. And as the business hits more milestones, our confidence in the OPSB opportunity continues to grow. It offers a significant capital-efficient growth avenue, which we’re targeting through territory expansion, accelerated R&D and scaling our sales force. Recently, execution of the OPSB strategy made significant progress, which will positively impact the balance of 2025 and 2026, as evidenced by another strong quarter of growth in excess of 20% and now surpassing our initial guidance for 2025 territory expansion. As mentioned above and in our press release, we have now expanded our footprint into 2 very large markets, New York City and California, expanded Denver and Ohio as well as expanded for the first time internationally in Ireland.

As we examine some of these recent announcements, I’d like to highlight a few key points with each. Starting with greenfield clinic expansion. First, we have entered into a new territory with our first clinic in California. The Los Angeles market provides access to millions of potential pediatric and adolescent patients and the location in California provides us the opportunity for further expansion across the state. We are thrilled to be establishing OPSB in this territory, and we’ll look to build off this initial clinic to further expand our footprint within this incredibly large market. Next, we’ve opened a new clinic in Dayton, Ohio, providing skilled clinicians a presence within Dayton Children’s Hospital as well as a new clinic in Denver, Colorado, where we continue to build our footprint.

Now looking at our Acquihire opportunities. First, we’ve added multiple locations to our existing clinics in the Greater New York City territory. Each of these new clinics are located in major children’s hospital centers. While we are already in this territory, these new clinics represent a significant opportunity within a very large market, allowing us to further penetrate this market. Notably, we have also announced our first international client with a small Acquihire in Ireland. This location is complementary to OrthoPediatrics’ strong implant business and one of the country’s largest pediatric hospitals and provides opportunities to expand with additional Ireland-based clinics in the future. We expect this clinic will drive further synergies with the implant business as we are growing scoliosis implant revenue there as well.

This is a major step into the international markets and just the beginning of the journey for OPSB International. Following a strong first quarter, the second quarter has further built on the successful start to 2025 for the OPSB business, and our recent actions have us well positioned to overperform our goals in H2 and is setting us up nicely for 2026. As of today, we now operate over 40 clinics worldwide, up from the 26 acquired with Boston O&P in January of 2024 and have expanded into 6 territories, surpassing our goal of 4 in 2025. We’re seeing a strong wave of clinic expansion opportunities, driven by high customer demand and a robust pipeline. This momentum reinforces our decision to move aggressively, and we expect to share more updates in the near future.

The OPSB strategy is clearly working and has proven to be a highly successful expansion for OrthoPediatrics. The synergies with our implant business are exceptionally strong, and we remain focused on executing our plan to secure a dominant share in this market. Moving to the Scoliosis business. Our strong growth of 35% seen in Scoliosis this quarter was again driven by more share taking in both the U.S. and OUS markets with increasing demand from new markets in the EU and the Middle East. U.S. Scoli growth continues to be led by new users adopting OrthoPediatrics’ technology, including ApiFix, RESPONSE as well as our commitment to new solutions for EOS patients in addition to 7D. This quarter, we saw even stronger surgeon conversion and are feeling the positive impact of past conversions in the busy summer season.

To this point, there has been a large uptick in new surgeon users, both of ApiFix and RESPONSE, resulting in strong summer case volume starting in mid-May that should extend throughout H2 and 2026. In addition, sales and placements of 7D units in key U.S. accounts were healthy in the second quarter. The large pipeline of 7D targets will further build upon this progress, and we expect this will drive further share gains and growth in the coming quarters. International Scoliosis, while still small, is becoming increasingly more relevant as we onboard new high-volume users and rapidly grow revenue. As we look to the second half of 2025, we expect small stature EU MDR approval, and we’ll begin providing more updates as they come. Looking at our EOS product portfolio, following its FDA clearance, we expect the first cases with VerteGlide to be completed in August.

The addition of VerteGlide should provide further tailwinds to an already growing business. The rest of our EOS products are progressing according to plan, and we are excited to continue to see development across our Scoliosis portfolio. Moving on to international. International sales were solid in the quarter as a result of extremely strong demand in surgical volume in Europe and scoliosis set sales to stocking distributors. While we are pleased with the many positive trends within our international business, T&D growth was offset by lower set sales in LatAm. Elsewhere, we are very pleased with international expansion progress, especially as we have our first international OPSD clinic expansion and see robust demand for new scoliosis markets abroad.

Within our international business, EU MDR approval remains a large catalyst for our future growth. And during the second quarter, we achieved our first EU MDR approval through OP Canada, which included the Pega product portfolio. This is a huge milestone for us as we anticipate several additional approvals in the coming quarters as we continue the process of EU MDR registration and expect to launch new products into Europe next year. As a reminder, EU MDR approval for implants is an extensive process, but we believe it is the right thing to do for kids who need these devices outside of the U.S., and it strengthens our strategic position. That brings us to Surgeon Training and Education. In the second quarter, we hosted 182 unique training experiences for over 3,420 health care professionals.

This includes interactions from the Pediatric Orthopedic Society of North America, or POSNA, a key industry event in May. OrthoPediatrics was once again proud to be the leading sponsor and highlighted our growing portfolio of pediatric solutions with multiple events and new products on display. While at POSNA, OrthoPediatrics, the Ruth Jackson Orthopaedic Society and POSNA hosted a women’s networking launches where we had over 150 participants. We are grateful to partner with others to support events such as this and we will continue to do so in the future. And with that, I’d like to turn the call over to Fred to provide more detail on our financial results. Fred?

Fred L. Hite: Thanks, Dave. Taking a closer look at the P&L. Our second quarter of 2025 worldwide revenue of $61.1 million increased 16% compared to the second quarter of 2024. Growth in the quarter was driven primarily by strong performance across Trauma and Deformity, Scoliosis and OPSB, slightly offset by lower growth in international revenues. U.S. revenue was $48.1 million, a 17% increase from the second quarter of 2024, representing 79% of our total revenue. Growth in the quarter was primarily driven by Trauma and Deformity, Scoliosis and OPSB. We generated total international revenue of $12.9 million, representing growth of 12% compared to the second quarter of 2024 and representing 21% of our total revenue. Growth in the quarter was primarily led by increased procedure volumes and Scoliosis set sales, partially offset by lower T&D set sales to Latin America.

In the second quarter of 2025, Trauma and Deformity global revenue of $41.7 million increased 10% compared to the prior year period. Growth was primarily driven by PNP Femur, PNP Tibia, DF2 and OPSB, partially offset by lower T&D set sales to Latin America. In the second quarter of 2025, Scoliosis global revenue of $18.5 million increased 35% compared to the prior year period. Growth was primarily driven by increased sales of RESPONSE, ApiFix non-fusion system and revenue generated from 7D technology. Finally, Sports Medicine other revenue in the second quarter of 2025 was $0.9 million compared to $1.3 million in the prior year period. Turning to set deployment. $4.6 million of sets were consigned in the second quarter of 2025 compared to $7.8 million in the second quarter of 2024.

Touching briefly on a few key metrics. For the second quarter of 2025, gross profit margin was 72% compared to 77% for the second quarter of 2024. The change in gross margin was primarily driven by higher 7D growth as well as higher international set sales, which both generates lower gross margin. Total operating expenses increased $8.2 million or 18% compared to the prior year period to $54.7 million in the second quarter of 2025. The increase was mainly driven by $3.0 million of restructuring charges, increased noncash stock compensation as well as the incremental personnel required to support the ongoing growth of the company, including OPSB clinics. Sales and marketing expenses increased $2.5 million or 15% compared to the prior year period to $19.1 million in the second quarter of 2025.

The increase was mainly driven by increased sales commission expenses and an overall increase in volume of units sold. General and administrative expenses increased $3.1 million or 11% year-over-year to $30.4 million in the second quarter of 2025. The second quarter increase was driven primarily by increased noncash stock compensation as well as the addition of personnel and resources to support the continued expansion of the business, including OPSB clinics. Research and development expenses decreased by $0.4 million in the second quarter of 2025 due to timing of product development third-party invoices during the second quarter of 2025. Restructuring charges recorded during the second quarter of 2025 were $3.0 million and related to the company’s global restructuring plan started in the fourth quarter of 2024, aimed at improving operational efficiency, reducing operating costs as well as reducing staffing, which will benefit the second half of 2025 as well as 2026.

Total other income was $3.6 million for the second quarter of 2025 compared to $0.4 million of other expense for the same period last year. Non-GAAP net loss per share for the period was $0.11 per basic and diluted share compared to $0.23 per basic and diluted share for the same period last year. Adjusted EBITDA was $4.1 million in the second quarter of 2025, roughly 50% improvement when compared to $2.6 million for the second quarter of 2024. We ended the second quarter with $72.2 million in cash, short-term investments and restricted cash. We did draw down $25 million on the Braidwell line of credit at the end of June 2025. Turning to guidance. We are increasing our expectation for full year 2025 revenue to the range of $237 million to $242 million, representing year-over-year growth of 16% to 18%.

We are reiterating the guidance that our full year gross margin will be within the range of 72% to 73%. We also continue to expect to generate between $15 million to $17 million of adjusted EBITDA in 2025. Additionally, we continue to expect approximately $15 million of new set deployed in 2025. This represents our continued focus on driving the business to free cash flow breakeven by 2026, and we anticipate delivering our first quarter of free cash flow positivity in the fourth quarter of 2025. I will now turn the call back over to Dave for his closing remarks.

David R. Bailey: Thanks, Fred. We’re very pleased with the progress made through the first half of 2025. Our focus this year is on strong execution, scaling OPSB, leveraging prior set deployments and driving growth through innovative product launches. We’re fully committed to helping more children than ever, significantly growing revenue, improving adjusted EBITDA and reducing cash burn in 2025 and beyond. And the second quarter was another positive step towards those goals and has positioned us well for a strong second half of the year. Before closing, I want to thank all of our associates, our partners in pediatric health care and you, our investors, for continuing to share our mission to help 1 million children each year. Operator, let’s open the call for Q&A.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Ryan Zimmerman of BTIG.

Ryan Benjamin Zimmerman: Can you hear me okay?

David R. Bailey: Yes.

Ryan Benjamin Zimmerman: Great. Appreciate all the updates and the color. Maybe talk to us a little bit about the clinic strategy for a minute, Dave. What are you seeing out of the existing clinics? How are those doing? How are those tracking from a production standpoint? And with all these new clinics announced today, kind of when you expect those newer clinics to contribute to growth?

David R. Bailey: Yes. Great question, Ryan. So I think the existing clinics that we acquired, so we had 26 clinics when we acquired Boston. I think generally speaking, we see growth in those clinics. So let’s say, same-store sales kinds of growth. There’s more patient flow and largely due to the investments that we’ve made on the sales side. Our newer greenfield clinics, as you know, take a little bit more time to kind of peak. I would say none of the greenfields we’ve done so far are — they’re not at max volume, but certainly, they are contributing to revenue because it’s all growth that we’re getting from those clinics, but they’re not — there’s none of them at this stage, I think, are maxed out. Potentially, what we have going at Nationwide Children’s, which is, as you know, embedded in a super high-volume children’s hospital.

That one, I would say, is growing extremely rapidly, and we have, I would say, a multitude of the share there. But the greenfields grow different dependent upon whether we have them in the hospital. The ones we have in hospital obviously grow much more rapidly and I think start to turn a profit much more quickly. The ones where we can’t get in the hospital, but they’re around the hospital or in a suburb, obviously, those take a little bit more time to drive patients to. But overall, I think we’re very pleased with the way the growth is coming through the clinics we acquired, the clinics we’ve greenfield and the Acquihire clinics. And I think the Acquihire clinics, obviously, there were some revenue attached to some of those clinics, but using the sales force to drive more volume through those clinics and more of our products through those clinics, that’s working as well.

So — and I think to answer your last question, you’d hopefully hear the bullish tone in my voice and obviously, talking about what we think we’re going to see in H2. A lot of that is driven by the fact that we do have more clinics. We’re ahead in terms of our territory expansion from 6 to 4. And we hinted in the script, obviously, that there’s more opportunities for us. And so I think that’s part of the cause for our bullishness as we see — as we head into the second half here.

Ryan Benjamin Zimmerman: Yes. Okay. And then, Fred, you haven’t historically guided by segment, but I’m going to ask about it anyway, which is your Scoli business has done extremely well these past 2 quarters. You’re facing a little bit tougher comps in the back half of the year. On the T&D side, it’s a little bit lighter. I don’t know if you can comment so much, but any color you have in terms of the composition of growth as we think about it in the back half of the year because Scoli is doing exceedingly well. T&D, obviously, a little lighter from the OUS set sales this quarter. But just as you think about the balance of the year, particularly amongst those 2 segments, what are your expectations when you think about growth?

Fred L. Hite: Yes. Again, we don’t provide guidance by segment, but I think the Scoli business has done very, very well here in the first half of the year. Multiple new surgeons coming on. RESPONSE, very favorable; ApiFix; as well as 7D, which gives us nice growth in the future, both in the second half and into 2026. And so yes, I would expect Scoli growth is probably going to be on the stronger side overall, maybe not at the 35% mark, but heavier than the company growth each of the next 2 quarters would be my comment on segment growth.

Operator: Our next question comes from the line of Matthew O’Brien of Piper Sandler.

Matthew Oliver O’Brien: Maybe just sticking with T&D for a second here. I don’t know if — Fred or Dave, if you can talk a little bit about the, I guess, the limb deformity case, elective case slowdown, what caused that? And maybe if you can quantify that plus the set sales that you missed internationally? Because that business just was a bit softer than we were modeling, although Complex Spine was very good.

David R. Bailey: Yes. We commented in the script, and I wish I had a better answer for you, Matt. But our business, especially a business like that where we have extremely high share on the Deformity side of our T&D business. I mean, there’s — we do a large percentage of the overall sales of — in the United States and children’s hospitals with those products. I mean, it kind of ebbs and flows with some of the volume that we see from some of our major accounts. And for whatever reason in the first, I would say, 6 weeks or so of Q2, the volume was just a little lighter. And then we saw that come back pretty aggressively in the back 6 weeks, certainly June, very strong overall. And not entirely sure why we saw that. And certainly, there’s nothing that is long term and problematic about it because it rided itself very rapidly.

But it did contribute to a slightly lower growth rate, I think, on the T&D in the U.S. than we had expected. And then obviously, you have some of the set sales, which we control a little bit more in terms of the set sales that we’re not taking in Brazil. So I don’t think there’s anything I’m too concerned about there. I wish we knew exactly why that volume ebbed and flowed a little bit like that, but it did contribute a little bit. But on the other side of that, the Trauma side of the T&D business was extremely strong and it seemed like the Trauma volumes in the quarter were as strong as they have ever been, particularly U.S.-based. And great to see products like PNP Tibia, DF2, those things really taking a lot of share. And so it was a bit of a tale of 2 cities in terms of those 2 businesses.

But again, nothing long term that we can point to here. It was just a little slower in the first part of the second quarter on that business.

Matthew Oliver O’Brien: Got it. And then to follow up on Ryan’s question on the OPSB franchise, and this is the 2-parter, so forgive me. But are you really trying to say the reason you decided to go and expand even faster than expected is because the existing centers plus the ones you’ve added are ramping faster than expected? And then, Fred, the EBITDA number for the year is steady even though you’re adding more centers. I know there’s a lot of upfront costs with those centers, [ and that’s ] crazy. But so would that also imply that the profitability of those centers might be coming along a little faster than we had anticipated?

David R. Bailey: Yes. Listen, I don’t think that we specifically set out to drastically accelerate the territory expansion on our own. I mean the demand for this is very high. And it’s still a very small business, generally speaking. And so — I mean, we’re not going to place a governor on the expansion opportunities we see within OPSB. We view this as — there are 300 children’s hospitals that we serve in the United States. We have accounts — we have sales for our implant products in every one of those. And over the course of certainly the long run, we want to be able to serve all 300 of those children’s hospitals with clinics in our OPSB product portfolio. And so it’s — we are seeing a high demand for opportunities for clinic expansion in OPSB.

And I guess we’re just not going to governor the growth opportunities there. Yes, some of that comes with some upfront cost, some upfront expense. But I think the prudent thing here is that we got an opportunity to dominate that segment of the market. Our customers are very adamant about us expanding, and we’re going to continue to expand in these big jurisdictions as fast as we can.

Fred L. Hite: Yes. And when you look at it, there is a diversity of these centers. So inside of Dayton’s hospital, inside nationwide as compared to — at a satellite location and then Acquihire versus start-up. What I would say is that they are all performing within our expectations and what we’ve kind of had modeled. And so no big surprises on any of those as compared to what we expected. Very pleased with the growth, the ramp of those centers and the profitability of those. And to Dave’s point, we’re not going to limit the growth of those. We’re going to continue to open them and take advantage of the demand that’s there and just keep this thing going, not just for the next couple of quarters, but really for the next several years given the long list of demand that’s out there for us.

Operator: Our next question comes from the line of Mike Matson of Needham & Company.

Joseph Scott Conway: This is Joseph on for Mike. I guess maybe to start it off, just looking at product expansion internationally. I’m just trying to understand a little bit how you guys are going about this? Is it more bit by bit? Should we expect kind of like product launches in different tranches over the years? And then kind of just on the same point, international growth has been accelerating for the last couple of quarters. I heard what you called out in LatAm. But I guess I’m kind of just wondering where you guys are thinking when OUS or international will start to outpace U.S. growth as more product launches happen? And do you think once that does happen, that’s going to be a kind of consistent thing for a while?

David R. Bailey: Yes, it’s a great question. The international business, like you’ve called out and we called out in the script, I mean you see that business, particularly in Europe and the Middle East, Australia, some of these places, in particular, where we have agencies, really growing rapidly. And I would say, yes, generally speaking, you see that business outpacing the U.S. growth minus some of the disruption we’ve had in Brazil. And I think those marketplaces, we have much less market share than we have in the United States. So I think, generally speaking, you could expect those markets to continue to grow more rapidly than what we see in the U.S. That said, it’s — when we see the Scoli business growing the way it is in the United States, it’s hard to project that we’re going to grow more than 35% outside of the U.S. But to be fair, those are small businesses outside of the U.S. We have new opportunities on Scoli and just everything there is growing really nicely, again, with the exception of some of the stuff we’re doing in Brazil.

I think if you look at EU MDR, I think that’s what you must be referring to. Yes, when products get approved on EU MDR, we think this is kind of going to be a quarter-by-quarter new product launch timeline. We did get our first EU MDR approval for a number of the Pega products through OP Canada. A number of those products did have CE. So there wasn’t a big expansion opportunity for us there. But it was fantastic, frankly, to see that we got the first one done, and we expect several more in the future. So I think what you’ll see from us back half of this year or certainly in 2026 and 2027 is, yes, not launching all of these products simultaneously, but launching new products that are well used here in the United States into European jurisdictions almost on a quarter-by-quarter basis.

And I do think that you could expect that at least the European business, Australian business, some of those businesses that are very stable to continue to grow, particularly on the T&D side, continue to grow faster than the U.S. business.

Joseph Scott Conway: Okay. Great. That’s super helpful. And then I guess just a real quick one for clarification. So VerteGlide, those first cases are — I think you just said it’s this month. Is eLLi the next product launch there in EOS? Or is there anything smaller that you guys just haven’t talked about?

David R. Bailey: No, I think eLLi is the next. So we believe there’s 3 products really needed to effectively take a major share of the EOS market, and that’s the RESPONSE Rib and Pelvic, which we launched last year, the VerteGlide device, which, yes, as I said, we’ll do our first cases here in the next few weeks, which is awesome, a culmination of several years of work and work with FDA and surgeons to get that much-needed device out. So super excited about that. And then eLLi is the next big one, I would say. And product development, I think, on the R&D side is on track at this point. We’re hoping to get that product before the agency, hopefully early next year. If we do cases next year, I think that would be great, but it’s not going to be a full-blown launch, I would say, next year, but that will really complete the development for us within the EOS portfolio.

Joseph Scott Conway: Okay. Great. Well, congrats on a record quarter.

Operator: Our next question comes from the line of Ben Haynor of Lake Street Capital Markets.

Benjamin Charles Haynor: First for me on OPSB, are there any changes to your guys’ preferences on acquisition versus de novo? Are there certain sort of geographic market dynamics that favor one or the other? Any color there on what you — what that might look like in the future? Or is it just kind of how it’s looked in the past?

David R. Bailey: Yes, Ben, that’s a great question. I think we would generally prefer the greenfield opportunities, particularly when we already have a clinic established. And so if we’re in a jurisdiction or a state where we have clinics established already, we are — we have reimbursement we’re in a position where we could see patients, I think greenfield, assuming we can get a good location in or near the hospital is preferred. The revenue ramp takes a little bit longer, but we don’t have to make one of these small acquisitions. So I think that generally speaking, in those markets where we already have established, that’s why Dayton makes a ton of sense. We already were established in Ohio. While it took us some time, it’s a fairly easy setup on the greenfield side, and there’s very limited cost associated with that.

On the Acquihire, generally, we’re doing — executing Acquihire in circumstances where we don’t have any current footprint, any current established infrastructure. And so we can do an Acquihire in a big jurisdiction, for example, or a big state that gives us license to then start setting up some greenfields. And so in that instance, we think the Acquihire makes the most sense. obviously comes with a little bit of revenue. We get an established footprint, and then there’s a number of opportunities for us to grow off of that base. I think that’s probably the right call just because it accelerates the greenfield expansion opportunities for us in an area like that.

Benjamin Charles Haynor: Okay. Got it. That’s definitely helpful. And then on the EOS side of things, that’s great that the VerteGlide first cases will be in the next handful of weeks. Obviously, there’s some anticipation out there for eLLi. I know you guys have had confidence that, that ultimately leads to a pretty big halo effect. Do you still get that sense from talking to potential customers there?

David R. Bailey: Without question. I think as much as we’re very pleased, obviously, with the kind of growth that we’re seeing on scoliosis. I would say, though, the halo effect just from the fact that we are making those kinds of investments in the areas of really great unmet need in scoliosis treatment, that halo effect is, in fact, already benefiting the business in terms of getting opportunities with customers that maybe you have known us for a long time but haven’t given us an opportunity to earn their fusion business. And I think that is happening. And so that’s a driver, in addition to 7D and ApiFix and all the other things, I think just the fact that we’re making the investment on the EOS side is — it’s a big deal to our customers, and it shows a commitment that I think is very unique.

And partially, you think about that commitment we’re making and then the commitment on the specialty bracing side and partnering on there, I mean, all of that is creating a really nice halo around the Scoli business, and we think that will continue.

Benjamin Charles Haynor: Okay. Got it. And so essentially, you get some benefit from eLLi and that makes really no need to kind of rush cases out there as — after approval.

David R. Bailey: Yes. I mean we have some training to do on VerteGlide. So VerteGlide, what we just got approved, and we’re going to start, obviously, with the surgeons that have invested so much time in this technique and we’ll be doing that first. We’re definitely not in a huge rush to expand that everywhere. We want to get some first cases under our belt. But once we do, I would expect that to go pretty rapidly. We have the inventory to support it. It will be a bit of a training exercise to support that. And then we do think that of the 3 products in the EOS portfolio that eLLi probably represents the biggest opportunity. And I think it’s probably the most widely used type of technique for early onset scoliosis. And so we are very excited about the opportunities that eLLi will provide. It’s just — we got another year or so before I think we can start enjoying that.

Operator: [Operator Instructions] Our next question comes from the line of Richard Newitter of Truist Securities.

Ravi Misra: This is actually Ravi on for Rich. So I wanted to kind of get into the Trauma kind of portfolio a little bit. Now, you’ve been releasing a number of new products and another press release this afternoon. Just want to kind of understand and get a sense for where you think there are holes in that bag right now that you still need to fill and maybe what the end market growth rate might be from a [ WAM ] perspective in that space? And then my second question just upfront, just on Deformity, trying to understand your commentary around stronger June and July trends. Do you think potentially there were some cases maybe that were delayed to the summer months or so explained from the 2Q shortfall? Just any more color you can provide there.

David R. Bailey: Yes, good question. So I don’t think that cases were delayed. Again, I mean, some of these product lines, we — not all, but we can kind of measure overall surgical volume with a few of our product lines that we have. I mean there is — we have near 100% share in certain product lines because they’re the only such products that exist in the Deformity Correction space. And so again, we see some of times this ebbs and flows. And so I don’t know that anything was being pushed into the summer, and that’s possible. But the net-net was it was just a little light and then it came back to kind of normal volumes. We didn’t certainly make that up, obviously, in June. When you talk about the Trauma and Deformity portfolio, I think 3P, you saw a press release here.

We did our first 3P case here last week, which was a huge milestone for the business. The 3P system does span Deformity Correction as well as Trauma. So the 3P surgery that was done last week was, in fact, a Trauma or a Deformity application for it. And so I think that, again, for a business that has a lot of share, this will be a nice jolt to that business to be able to have the 3P Hip system that’s largely around deformity. The other areas where we may have holes, and I think 3P really helps address that is that there’s a lot of specialty plating, more anatomic plating opportunities for us that we don’t have products for. And so for us to be able to develop this, what we think will be the most comprehensive plating system with specialty plates for trauma and for limb deformity across almost every bone and every anatomic structure in — available on the pediatric side will be certainly expand the indications for use for that system.

And I would also say that our existing plating system that is out there now, it’s a system that we’ve had for more than 10 years. And I think the technology has advanced in locking screw technology and variable angle screw technology, and maybe not advanced as much on the pediatric side, but certainly on the adult side. And I think the 3P brings technology to bear in the Trauma and Deformity section — segment of the pediatric orthopedic market that’s never been seen. And so it will be a nice opportunity for us certainly over the course of what will probably be 3 years here where we’ll be launching multiple systems every year in the 3P family. It’s going to be a nice opportunity for us to continue to grow that business and continue to take share.

Operator: I am showing no further questions at this time. I would now like to turn it back to Dave Bailey for closing remarks.

David R. Bailey: Great. Thanks, operator. Thank you all for your continued interest in OrthoPediatrics. And I think Fred and I will be at a number of conferences in the near future. So look forward to seeing several of you there. Have a super evening, and we’ll talk to you soon.

Operator: Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.