[10-Q] Orthofix Medical Inc. Quarterly Earnings Report
Orthofix Medical (OFIX) filed its Q3 2025 10‑Q reporting net sales of $205.6 million, up 4.6% year over year, and a net loss of
Cash and cash equivalents were
- None.
- None.
Insights
Solid top-line growth and margin gains, but losses persist.
Orthofix posted Q3 net sales of
Cash stood at
Key swing factors are execution in U.S. Spine Fixation (noted procedure growth) and continued SG&A discipline. The updated Lattus contingent liability of
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to .
Commission File Number:
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(Registrant's telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of October 31, 2025,
Securities registered pursuant to Section 12(b) of the Act:
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Table of Contents
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PART I |
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FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements |
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Condensed Consolidated Balance Sheets as of September 30, 2025, and December 31, 2024 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025, and 2024 |
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Condensed Consolidated Statements of Changes in Shareholders' Equity for the three and nine months ended September 30, 2025, and 2024 |
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Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025, and 2024 |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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23 |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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31 |
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Item 4. |
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Controls and Procedures |
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32 |
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PART II |
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OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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33 |
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Item 1A. |
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Risk Factors |
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33 |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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33 |
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Item 3. |
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Defaults Upon Senior Securities |
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33 |
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Item 4. |
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Mine Safety Disclosures |
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33 |
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Item 5. |
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Other Information |
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33 |
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Item 6. |
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Exhibits |
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33 |
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SIGNATURES |
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2
Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts, and projections. All statements, other than statements of historical fact, contained in this report, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "intends," "predicts," "potential," "positioned," "deliver," or "continue" or the negative version of those terms and other similar expressions. Forward-looking statements include, but are not limited to, statements about:
Forward-looking statements are not guarantees of future performance and involve risks, uncertainties, estimates, and assumptions. Any or all forward-looking statements that we make may turn out to be wrong (due to inaccurate assumptions that we make or otherwise), and our actual outcomes and results may differ materially from those expressed in forward-looking statements. Potential risks and uncertainties that could cause actual results to differ materially include, but are not limited to, those set forth in Part I, Item 1A under the heading Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 10-K"); Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations of the 2024 10-K; and elsewhere throughout the 2024 10-K, and in our reports filed with the U.S. Securities and Exchange Commission (the "SEC") subsequent to the date we filed the 2024 10-K with the SEC. You should not place undue reliance on any forward-looking statements. Further, any forward-looking statement in this report speaks only as of the date hereof, unless it is specifically otherwise stated to be made as of a different date. Except as required by law, we undertake no obligation to update, and expressly disclaim any duty to update, our forward-looking statements, whether as a result of circumstances or events that arise after the date hereof, new information, or otherwise.
Trademarks
Solely for convenience, our trademarks and trade names in this report are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that we will not assert, to the fullest extent under applicable law, our rights thereto.
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ORTHOFIX MEDICAL INC.
Condensed Consolidated Balance Sheets
(U.S. Dollars, in thousands, except par value data) |
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September 30, |
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December 31, |
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(Unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Accounts receivable, net of allowances of $ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property, plant, and equipment, net |
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Intangible assets, net |
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Goodwill |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and shareholders’ equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Current portion of finance lease liability |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Long-term portion of finance lease liability |
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Other long-term liabilities |
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Total liabilities |
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Shareholders’ equity |
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Common shares $ |
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Additional paid-in capital |
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Accumulated deficit |
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Accumulated other comprehensive income (loss) |
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Total shareholders’ equity |
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Total liabilities and shareholders’ equity |
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$ |
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$ |
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The accompanying notes form an integral part of these condensed consolidated financial statements.
4
ORTHOFIX MEDICAL INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
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Three Months Ended |
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Nine Months Ended |
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(Unaudited, U.S. Dollars, in thousands, except per share data) |
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2025 |
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2024 |
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2025 |
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2024 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Sales, general, and administrative |
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Research and development |
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Acquisition-related amortization, impairment, and remeasurement (Note 11) |
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Operating loss |
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Interest expense, net |
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( |
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( |
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Other (expense) income, net |
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( |
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( |
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( |
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Loss before income taxes |
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( |
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( |
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Income tax expense |
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( |
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( |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per common share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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( |
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( |
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Weighted average number of common shares: |
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Basic |
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Diluted |
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Other comprehensive (loss) income, before tax |
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Unrealized gain on debt securities |
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— |
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— |
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— |
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Reclassification adjustment for historical unrealized gain on debt security |
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— |
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— |
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— |
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( |
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Currency translation adjustment |
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( |
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Other comprehensive (loss) income, before tax |
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( |
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Income tax expense related to other comprehensive (loss) income |
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— |
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— |
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— |
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— |
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Other comprehensive (loss) income, net of tax |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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The accompanying notes form an integral part of these condensed consolidated financial statements.
5
ORTHOFIX MEDICAL INC.
(Unaudited, U.S. Dollars, in thousands) |
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Number of |
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Common |
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Additional |
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Accumulated Deficit |
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Accumulated |
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Total |
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At December 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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( |
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— |
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— |
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At March 31, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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— |
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— |
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At June 30, 2025 |
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$ |
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$ |
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$ |
( |
) |
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$ |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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( |
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( |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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— |
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— |
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At September 30, 2025 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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(Unaudited, U.S. Dollars, in thousands) |
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Number of |
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Common |
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Additional |
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Accumulated Deficit |
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Accumulated |
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Total |
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At December 31, 2023 |
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$ |
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$ |
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$ |
( |
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( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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( |
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— |
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— |
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( |
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At March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss, net of tax |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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— |
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— |
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At June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Other comprehensive income, net of tax |
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— |
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— |
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— |
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— |
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Share-based compensation expense |
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— |
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— |
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— |
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— |
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Common shares issued, net |
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( |
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— |
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— |
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( |
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At September 30, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes form an integral part of these condensed consolidated financial statements.
6
ORTHOFIX MEDICAL INC.
Condensed Consolidated Statements of Cash Flows
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Nine Months Ended |
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(Unaudited, U.S. Dollars, in thousands) |
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2025 |
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2024 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
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Adjustments to reconcile net loss to net cash from operating activities |
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Depreciation, amortization, and impairment |
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Inventory reserve expenses |
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Amortization of inventory fair value step-up |
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— |
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Amortization of operating lease assets, debt costs, and other assets |
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Provision for expected credit losses |
|
|
|
|
|
|
||
Deferred income taxes |
|
|
|
|
|
|
||
Share-based compensation expense |
|
|
|
|
|
|
||
Loss on disposal of fixed assets |
|
|
|
|
|
|
||
Change in valuation of investment securities |
|
|
( |
) |
|
|
|
|
Change in fair value of contingent consideration |
|
|
( |
) |
|
|
|
|
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Other current liabilities |
|
|
( |
) |
|
|
( |
) |
Contingent consideration milestone payment |
|
|
( |
) |
|
|
— |
|
Other long-term assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities |
|
|
|
|
|
|
||
Capital expenditures |
|
|
( |
) |
|
|
( |
) |
Other investing activities |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities |
|
|
|
|
|
|
||
Proceeds from issuance of common shares |
|
|
|
|
|
|
||
Payments related to tax withholdings for share-based compensation |
|
|
( |
) |
|
|
( |
) |
Payments related to finance lease obligation |
|
|
( |
) |
|
|
( |
) |
Proceeds from credit facility |
|
|
— |
|
|
|
|
|
Repayment of borrowings from credit facility |
|
|
— |
|
|
|
( |
) |
Contingent consideration milestone payment |
|
|
( |
) |
|
|
( |
) |
Payment of debt issuance costs and other financing activities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
|
|
Effect of exchange rate changes on cash |
|
|
|
|
|
( |
) |
|
Net change in cash and cash equivalents |
|
|
( |
) |
|
|
( |
) |
Cash, cash equivalents, and restricted cash at the beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at the end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Components of cash, cash equivalents, and restricted cash at the end of period |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at the end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Noncash investing activities - Accrued purchases of capital expenditures |
|
$ |
|
|
$ |
|
||
Noncash investing activities - Purchase of intangible assets |
|
|
|
|
|
|
||
The accompanying notes form an integral part of these condensed consolidated financial statements.
7
ORTHOFIX MEDICAL INC.
Notes to the Unaudited Condensed Consolidated Financial Statements
1. Business and basis of presentation
Description of the Business
Orthofix Medical Inc. (the "Company" or "Orthofix") is a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, Orthofix delivers exceptional experiences and life-changing solutions to patients around the world. Orthofix offers a comprehensive portfolio of spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies, including the 7D FLASH navigation system.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Pursuant to these rules and regulations, certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair statement have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's 2024 Form 10-K. Operating results for the three and nine months ended September 30, 2025, are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2025.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition; contractual allowances; allowances for expected credit losses; inventories; valuation of intangible assets; goodwill; fair value measurements, including contingent consideration; litigation and contingent liabilities; tax matters; and share-based compensation. Actual results could differ from these estimates.
Changes in Presentation of Consolidated Financial Statements
Certain prior year balances have been reclassified in the condensed consolidated financial statements to conform to current period presentation.
2. Recently adopted accounting standards and recently issued accounting pronouncements
Adoption of Accounting Standards Update ("ASU") 2023-09 - Improvements to Income Tax Disclosures
In December 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-09, which enhances the transparency and usefulness of income tax disclosures required pursuant to Topic 740, Income Taxes, to provide information to better assess how an entity's operations, tax risks and tax planning, and operational opportunities affect its tax rate and future cash flows. The Company adopted this standard effective January 1, 2025, on a modified retrospective basis. Adoption of this standard did not have a material impact on the Company's consolidated balance sheet, statements of operations, or cash flows.
8
Recently Issued Accounting Pronouncements
Topic |
|
Description of Guidance |
|
Effective Date |
|
Status of Company's Evaluation |
Disclosure Improvements - Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative (ASU 2023-06) |
|
Adds interim and annual disclosure requirements to a variety of subtopics in the Accounting Standards Codification, including those focusing on accounting changes, earnings per share, debt, and repurchase agreements. The guidance will be applied prospectively. The effective date will be the date when the SEC's removal of the related disclosure requirement becomes effective, with early adoption prohibited. |
|
Various |
|
The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. |
Disaggregation of Income Statement Expenses (ASU 2024-03) |
|
Improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the note to the financial statements at interim and annual reporting periods. The amendments are to be applied prospectively to financial statements issued for reporting periods after the effective date or retrospectively to all prior periods presented in the financial statements. |
|
January 1, 2027 |
|
The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. |
Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05) |
|
Introduces a practical expedient related to applying Subtopic 326-20 to current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The amendments are to be applied prospectively. |
|
January 1, 2026 |
|
The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. |
Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06) |
|
Aligns the accounting for internal-use software with how software is developed to increase the operability of the recognition and capitalization of internal-use software costs in accordance with Subtopic 350-40. The guidance will be applied prospectively to new software costs incurred as of the beginning of the adoptions period for all projects, including in-process projects. |
|
January 1, 2028 |
|
The Company is currently evaluating the impact this ASU may have on its consolidated financial statements. |
Other recently issued ASUs, excluding those ASUs which have already been disclosed as adopted or described above, were assessed and determined not applicable, or are expected to have minimal impact on the Company's condensed consolidated financial statements.
3. Inventories
Inventories were as follows:
(U.S. Dollars, in thousands) |
|
September 30, |
|
|
December 31, |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
||
Finished products |
|
|
|
|
|
|
||
Inventories |
|
$ |
|
|
$ |
|
||
9
4. Leases
A summary of the Company's lease portfolio as of September 30, 2025, and December 31, 2024, is presented in the table below:
(U.S. Dollars, in thousands) |
|
Classification |
|
September 30, |
|
|
December 31, |
|
||
|
|
|
|
(Unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||||
Operating leases |
|
|
$ |
|
|
$ |
|
|||
Finance leases |
|
|
|
|
|
|
|
|||
Total lease assets |
|
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
||
Current |
|
|
|
|
|
|
|
|
||
Operating leases |
|
|
$ |
|
|
$ |
|
|||
Finance leases |
|
Current portion of finance lease liability |
|
|
|
|
|
|
||
Long-term |
|
|
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
|
|||
Finance leases |
|
Long-term portion of finance lease liability |
|
|
|
|
|
|
||
Total lease liabilities |
|
|
|
$ |
|
|
$ |
|
||
Supplemental cash flow information related to leases was as follows:
(Unaudited, U.S. Dollars, in thousands) |
|
Nine Months Ended |
|
|
Nine Months Ended |
|
||
Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows from finance leases |
|
|
|
|
|
|
||
Financing cash flows from finance leases |
|
|
|
|
|
|
||
ROU assets obtained in exchange for lease obligations |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
|
||
Finance leases |
|
|
|
|
|
|
||
5. Long-term debt
The carrying values of the Company's outstanding debt obligations as of September 30, 2025, and December 31, 2024, were as follows:
(U.S. Dollars, in thousands) |
|
September 30, |
|
|
December 31, |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Outstanding Term Loans |
|
|
|
|
|
|
||
Principal amount |
|
$ |
|
|
$ |
|
||
Unamortized original debt discount |
|
|
( |
) |
|
|
( |
) |
Unamortized debt issuance costs and lenders fees |
|
|
( |
) |
|
|
( |
) |
Total indebtedness from outstanding term loans |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Revolving Credit Facilities |
|
|
|
|
|
|
||
Principal amount outstanding |
|
$ |
— |
|
|
$ |
— |
|
Total indebtedness outstanding |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Current portion of long-term debt |
|
$ |
— |
|
|
$ |
— |
|
Long-term debt |
|
|
|
|
|
|
||
Total indebtedness outstanding |
|
$ |
|
|
$ |
|
||
10
On November 7, 2024, the Company, as borrower, and its U.S. subsidiaries entered into a $
As of September 30, 2025, the Company had
6. Fair value measurements and investments
The fair value measurements of the Company's financial assets and liabilities measured on a recurring basis were as follows:
|
|
September 30, |
|
|
December 31, |
|
||||||||||||||
(U.S. Dollars, in thousands) |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Total |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Neo Medical convertible loan agreement |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Neo Medical preferred equity securities |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Lattus contingent consideration |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Deferred compensation plan |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Neo Medical Convertible Loan Agreement and Equity Investment
On October 1, 2020, the Company purchased shares of Neo Medical's preferred stock for consideration of $
The table below presents a reconciliation of the beginning and ending balances of the Company's investment in Neo Medical preferred equity securities:
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
||
Fair value of Neo Medical preferred equity securities at January 1 |
|
$ |
|
|
$ |
|
||
Conversion of loan into preferred equity securities |
|
|
|
|
|
|
||
Unrealized loss recognized in other expense, net |
|
|
|
|
|
( |
) |
|
Fair value of Neo Medical preferred equity securities at September 30 |
|
$ |
|
|
$ |
|
||
Cumulative unrealized loss on Neo Medical preferred equity securities |
|
$ |
|
|
$ |
( |
) |
|
11
The following table provides a reconciliation of the beginning and ending balances of the Convertible Loan, which was measured at fair value using significant unobservable inputs:
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
||
Fair value of Neo Medical Convertible Loan at January 1 |
|
$ |
|
|
$ |
|
||
Gain recognized in other comprehensive income |
|
|
— |
|
|
|
|
|
Interest recognized in interest income, net |
|
|
|
|
|
|
||
Foreign currency remeasurement recognized in other expense, net |
|
|
|
|
|
( |
) |
|
Expected credit loss recognized in other income, net |
|
|
— |
|
|
|
|
|
Conversion into preferred equity securities |
|
|
— |
|
|
|
( |
) |
Realized foreign currency loss recognized in other expense, net |
|
|
— |
|
|
|
( |
) |
Fair value of Neo Medical Convertible Loan at September 30 |
|
$ |
|
|
$ |
|
||
Lattus Contingent Consideration
In connection with the merger with SeaSpine Holdings Corporation ("SeaSpine") in 2023 (the "SeaSpine Merger"), the Company assumed a contingent consideration obligation under a purchase agreement between SeaSpine and Lattus Spine LLC ("Lattus") executed in December 2022. Under the terms of this agreement, the Company may be required to make installment payments to Lattus (the "Lattus Contingent Consideration") at certain dates based on future net sales of certain products (the "Lateral Products").
The estimated fair value of the Lattus Contingent Consideration is determined using a Monte Carlo simulation and a discounted cash flow model requiring significant inputs which are not observable in the market. The significant inputs include assumptions related to the timing and probability of launch dates for the Lateral Products, estimated future sales of the Lateral Products, revenue risk-adjusted discount rate, revenue volatility, and discount rates matched to the timing of payments. The following table provides a reconciliation of the beginning and ending balances for the Lattus Contingent Consideration measured at estimated fair value using significant unobservable inputs (Level 3):
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
||
Lattus Contingent Consideration estimated fair value at January 1 |
|
$ |
|
|
$ |
|
||
Change in fair value recognized in acquisition-related amortization, impairment, and remeasurement |
|
|
( |
) |
|
|
|
|
Installment payment |
|
|
( |
) |
|
|
— |
|
Lattus Contingent Consideration estimated fair value at September 30 |
|
$ |
|
|
$ |
|
||
The estimated fair value of the Lattus Contingent Consideration as of September 30, 2025, was $
The following table provides quantitative information related to certain key assumptions utilized within the valuation as of September 30, 2025:
(Unaudited, U.S. Dollars, in thousands) |
|
Fair Value as of |
|
|
Unobservable inputs |
|
Estimate |
|
Lattus Contingent Consideration |
|
$ |
|
|
Counterparty discount rates |
|
||
|
|
|
|
|
Revenue risk-adjusted discount rates |
|
||
7. Commitments and Contingencies
Arbitration claims with former executives
In September 2023, the Company's Board of Directors (the “Board“) terminated the employment of Keith Valentine, John Bostjancic, and Patrick Keran, who had served respectively as the Company’s President and Chief Executive Officer, Chief Financial Officer, and Chief Legal Officer (collectively, the “Former Executives”). The Board’s decision followed an investigation conducted by independent outside legal counsel and directed and overseen by a committee of certain of the Company’s independent directors. At the time of termination, the Company notified each of the Former Executives that their respective terminations of employment were being made for “Cause,” as such term is defined in applicable employment-related agreements (including each executive’s
12
respective Change in Control and Severance Agreement, dated June 19, 2023 (the “CIC and Severance Agreements”). The Former Executives subsequently made claims against the Company in arbitration in the State of California, asserting breach of contract because each of them was entitled to the severance payments and other equity-based rights that would be owed to them if their respective termination had been made “without Cause” under the CIC and Severance Agreements, and further asserting damages for purported defamation, false light invasion of privacy, and deceit, as well as indemnification and advancement for attorneys’ fees.
An arbitration hearing in Mr. Valentine’s arbitration process took place in October 2025. In addition, on October 2, 2025, the arbitrator in Mr. Valentine’s matter issued a preliminary order finding that, under applicable California law and the terms of Mr. Valentine’s CIC and Severance Agreement, (i) Mr. Valentine’s conduct prior to his entry into such agreement on June 19, 2023 cannot be considered for purposes of determining whether “Cause” existed under the agreement, and (ii) his conduct subsequent to that date did not amount to “Cause”. Therefore, the Company expects the arbitrator’s final ruling in the matter to determine that Mr. Valentine’s termination should have been made “without Cause” under such agreement, and award damages for Mr. Valentine’s breach of contract claim. The arbitrations for Messrs. Bostjancic and Keran remain pending.
The Company continues to disagree with the legal claims asserted by the Former Executives in the respective arbitration matters and is vigorously defending them. While certain legal issues remain pending in Mr. Valentine’s matter with respect to whether certain severance and equity-based rights are owed, and how much interest has accrued, the Company has recorded an accounting accrual in the amount of $
In addition to these arbitration claims, in September 2024 Messrs. Valentine, Bostjancic and Keran filed an action in California State Court against former director and interim CEO Catherine Burzik and current director Wayne Burris, seeking relief for, among other things, alleged defamation, false light invasion of privacy, intentional misrepresentation, false promise, and tortious interference with contract. The Company disagrees with the allegations contained in the action against Ms. Burzik and Mr. Burris and is vigorously defending the asserted claims. Due in part to the preliminary nature of the matter, the Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from the action.
Securities class action complaints
On August 21, 2024, a securities class action complaint captioned Bernal v. Orthofix Medical Inc., et al., Case No. 24-cv-00690, was filed in the United States District Court for the Eastern District of Texas (the "Bernal Complaint"). The plaintiff, a purported Company shareholder, alleges through the complaint violations of Sections 10(b) and 20(a) of the Exchange Act, and SEC Rule 10b-5 promulgated thereunder, and names as defendants the Company and the following former Company directors and officers: Jon Serbousek (former director and former President and Chief Executive Officer), Keith Valentine (former director and former President and Chief Executive Officer), John Bostjancic (former Chief Financial Officer), and Patrick Keran (former Chief Legal Officer). The complaint alleges that the Company made, and the named former directors and officers caused the Company to make, materially false and misleading statements between October 11, 2022, and September 12, 2023, that, according to the complaint, falsely assured the market regarding Messrs. Valentine, Bostjancic, and Keran's respective commitments to, among other things, ethical and legal standards and corporate responsibility.
On September 6, 2024, a securities class action complaint captioned O'Hara v. Orthofix Medical Inc., et al., Case No. 24-cv-01593, was filed in the United States District Court for the Southern District of California (the "O'Hara Complaint"). The plaintiff, a purported former shareholder of SeaSpine at the time of the SeaSpine Merger, alleges through the complaint violations of Sections 11, 12 and 15 of the Securities Act, and names most of the same defendants as the Bernal Complaint, as well as certain additional current and/or former Company directors and officers. The complaint makes similar assertions to the Bernal complaint, and alleges that the Company's registration statement on Form S-4 filed in 2022 in connection with the SeaSpine Merger, as well as related written and oral offering materials, contained untrue statements of material fact and material omissions, including, among other things, with respect to the effectiveness of the Company's internal controls. On November 26, 2024, the O'Hara Complaint was transferred to the Eastern District of Texas, and on December 11, 2024, the O'Hara Complaint was consolidated with the Bernal Complaint. On April 17, 2025, the plaintiffs filed an amended complaint in the consolidated action, captioned In re Orthofix Medical Inc. Securities Litigation, with substantially the same allegations contained in the Bernal Complaint and the O'Hara Complaint. The consolidated case is captioned In re Orthofix Medical Inc. Securities Litigation, Case No. 24-cv-00690 and is pending in the Eastern District of Texas. The Company and the individual defendants moved to dismiss the amended complaint on May 15, 2025.
13
On October 28, 2024, a derivative shareholder complaint was filed against certain of the Company's current and former officers and directors alleging derivative liability for the allegations made in the two complaints noted above. On December 18, 2024, a second derivative shareholder complaint was filed with the same allegations made in the first derivative shareholder complaint. On March 21, 2025, the two derivative shareholder complaints were consolidated into one case.
The Company disagrees with the legal claims asserted in these complaints and is vigorously defending them. Due in part to the preliminary nature of these three matters, the Company currently cannot reasonably estimate a possible loss, or range of loss, that may arise from the respective complaints.
Commitments
As a result of the SeaSpine Merger, the Company became party to agreements with certain distributor partners that provide the Company with an option to purchase, and an option for those partners to require the Company to purchase, the distribution business of those partners at specified future dates. At such time, the Company or distributor may (in certain cases, subject to satisfying certain conditions) submit written notice to the other of its intention to exercise its rights and initiate or require the purchase. Upon receipt of the written notice, the Company and the distributor will work in good faith to consummate the purchase, provided that the distributor meets the required conditions of such purchase option. Under certain of these agreements, the purchase price would be paid in shares of the Company's common stock, whereas for others, the purchase price can be paid in cash or shares, at the Company's option. Based on the closing price of the Company's common stock as of September 30, 2025, assuming the options under all the relevant agreements were exercised, the estimated total number of shares the Company would issue under these agreements was approximately
Italian Medical Device Payback ("IMDP")
In 2015, the Italian Parliament introduced rules for entities that supply goods and services to the Italian National Healthcare System. A key provision of the law is a 'payback' measure, requiring medical device companies in Italy to make payments to the Italian government if medical device expenditures exceed regional maximum ceilings. Companies are required to make payments equal to a percentage of expenditures exceeding maximum regional caps.
In the third quarter of 2022, the Italian Ministry of Health provided guidelines to the Italian regions and provinces on seeking payback of expenditure overruns relating to the 2015 through 2018 calendar years. Since receiving the guidelines, several regions and provinces have requested payment from affected medical device companies, including the Company. The Company has taken legal action to dispute the legality of such measures. In July 2024, the Italian Constitutional Court issued two judgments following public hearings on the matter held in May 2024. These judgments (i) declared the payback system itself as constitutionally legitimate and (ii) extended previously communicated reductions in the payback liability for certain fiscal years to all medical device companies, regardless of whether or not they had waived their legal claims on the matter.
The Company accounts for the estimated cost of the IMDP as sales, general, and administrative expense and periodically reassesses the liability based upon current facts and circumstances. As a result, the Company recorded expenses of $
8. Accumulated other comprehensive income (loss)
The components of and changes in accumulated other comprehensive income (loss) were as follows:
(Unaudited, U.S. Dollars, in thousands) |
|
Currency |
|
|
Neo Medical Convertible Loan |
|
|
Accumulated Other |
|
|||
Balance at December 31, 2024 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income |
|
|
|
|
|
— |
|
|
|
|
||
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Balance at September 30, 2025 |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
14
9. Revenue recognition and accounts receivable
Revenue Recognition
The Company has two reporting segments: Global Spine and Global Orthopedics. Within the Global Spine reporting segment, there are two product categories: (i) Bone Growth Therapies, and (ii) Spinal Implants, Biologics, and Enabling Technologies.
The tables below present net sales by product category by reporting segment:
|
|
Three Months Ended September 30, |
|
|||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Bone Growth Therapies |
|
$ |
|
|
$ |
|
|
|
% |
|||
Spinal Implants, Biologics, and Enabling Technologies |
|
|
|
|
|
|
|
|
% |
|||
Global Spine |
|
|
|
|
|
|
|
|
% |
|||
Global Orthopedics |
|
|
|
|
|
|
|
|
% |
|||
Net sales |
|
$ |
|
|
$ |
|
|
|
% |
|||
|
|
Nine Months Ended September 30, |
|
|||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Bone Growth Therapies |
|
$ |
|
|
$ |
|
|
|
% |
|||
Spinal Implants, Biologics, and Enabling Technologies |
|
|
|
|
|
|
|
|
% |
|||
Global Spine |
|
|
|
|
|
|
|
|
% |
|||
Global Orthopedics |
|
|
|
|
|
|
|
|
% |
|||
Net sales |
|
$ |
|
|
$ |
|
|
|
% |
|||
Product Sales and Marketing Service Fees
The table below presents product sales and marketing service fees, which are both components of net sales:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Product sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketing service fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Product sales primarily consist of the sale of bone growth therapies devices, spinal implants, certain biologics, enabling technologies, and orthopedics products. Marketing service fees are received from MTF Biologics ("MTF") based on total sales of biologics tissues sourced from MTF and relate solely to the Global Spine reporting segment. The Company partners with MTF to provide certain allograft solutions for various spine, orthopedic and other bone repair needs, with this partnership allowing the Company to exclusively market certain biologic offerings.
Accounts receivable and related allowances
The following table provides a detail of changes in the Company's allowance for expected credit losses for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Allowance for expected credit losses beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Current period provision for expected credit losses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Write-offs charged against the allowance and other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Effect of changes in foreign exchange rates |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Allowance for expected credit losses ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
10. Business segment information
The Company's operations are managed through
Corporate activities are comprised of operating expenses not directly identifiable within the two reporting segments, such as human resources, finance, legal, and information technology functions. The Company neither discretely allocates assets, other than goodwill, to its operating segments nor evaluates the operating segments using discrete asset information.
Global Spine
The Global Spine reporting segment offers two primary product categories: (i) Bone Growth Therapies and (ii) Spinal Implants, Biologics, and Enabling Technologies.
The Bone Growth Therapies product category manufactures, distributes, sells, and provides support services for market-leading bone growth stimulation devices that enhance bone fusion. These Class III medical devices are indicated as an adjunctive, noninvasive treatment to improve fusion success rates in the cervical and lumbar spine as well as a therapeutic treatment for non-spinal, appendicular fractures, treating both fresh or nonunion fractures. These products are sold almost exclusively in the U.S., using distributors and direct sales representatives to provide our devices to healthcare providers and their patients.
Spinal Implants, Biologics, and Enabling Technologies comprises (i) a broad portfolio of spine fixation implant products used in surgical procedures of the spine, (ii) one of the most comprehensive biologics portfolios in both the demineralized bone matrix and cellular allograft market segments, and (iii) image-guided surgical solutions to facilitate degenerative, minimally invasive, and complex surgical procedures. Spinal Implants, Biologics, and Enabling Technologies products are sold through a network of distributors and sales representatives to hospitals and healthcare providers on a global basis for Spinal Implants and Enabling Technologies, and primarily within the U.S. for Biologics.
Global Orthopedics
The Global Orthopedics reporting segment offers products and solutions for the underserved limb reconstruction market that encompasses four pillars: deformity correction, limb lengthening, complex fracture management, and limb preservation. This reporting segment specializes in the design, development, and marketing of external and internal fixation orthopedic products that are coupled with enabling digital technologies to serve the complete patient treatment pathway. The Company sells these products worldwide through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers.
16
The following table presents adjusted EBITDA, the primary metric used in managing the Company, by reporting segment:
|
|
Three Months Ended September 30, 2025 |
|
Nine Months Ended September 30, 2025 |
|
||||||||||||||||||
(U.S. Dollars, in thousands) |
|
Global Spine |
|
|
Global Orthopedics |
|
|
Total |
|
Global Spine |
|
|
Global Orthopedics |
|
|
Total |
|
||||||
Segment revenues |
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Sales, general, and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other segment expenses (benefits) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Depreciation, amortization, and share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciling items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange impact |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
SeaSpine merger-related costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restructuring costs and impairments related to M6 product lines |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Strategic investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acquisition-related fair value adjustments |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
||||
Interest and loss on investments |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
( |
) |
||||
Litigation and investigation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Employee retention credit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
|
|
|
|
|
|
$ |
( |
) |
||||
17
|
|
Three Months Ended September 30, 2024 |
|
Nine Months Ended September 30, 2024 |
|
||||||||||||||||||
(U.S. Dollars, in thousands) |
|
Global Spine |
|
|
Global Orthopedics |
|
|
Total |
|
Global Spine |
|
|
Global Orthopedics |
|
|
Total |
|
||||||
Segment Revenues |
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Sales, general, and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other segment expenses (benefits) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-GAAP Depreciation, amortization, and share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Segment Adjusted EBITDA |
|
$ |
|
|
$ |
|
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reconciling items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Share-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign exchange impact |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|||||
SeaSpine merger-related costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Strategic investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Acquisition-related fair value adjustments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest and loss on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Litigation and investigation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Succession charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss before income taxes |
|
|
|
|
|
|
|
$ |
( |
) |
|
|
|
|
|
|
$ |
( |
) |
||||
The following table presents depreciation and amortization by reporting segment:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Global Spine |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Global Orthopedics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
18
Geographical information
The table below presents net sales by geographic destination for each reporting segment and for the consolidated Company:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Global Spine |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Global Spine |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Global Orthopedics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Global Orthopedics |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
International |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following data includes net sales by geographic area:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
U.S. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Italy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
France |
|
|
|
|
|
|
|
|
|
|
|
|
||||
United Kingdom |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Germany |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Brazil |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Others |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following data includes property, plant, and equipment by geographic area:
(U.S. Dollars, in thousands) |
|
September 30, |
|
|
December 31, |
|
||
|
|
(Unaudited) |
|
|
|
|
||
U.S. |
|
$ |
|
|
$ |
|
||
Italy |
|
|
|
|
|
|
||
Germany |
|
|
|
|
|
|
||
Others |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
19
11. Acquisition-related amortization, impairment, and remeasurement
Acquisition-related amortization, impairment, and remeasurement consists of (i) amortization and impairment related to intangible assets acquired through business combinations or asset acquisitions and (ii) remeasurement of any related contingent consideration arrangements.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Amortization and impairment of acquired intangibles |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Changes in fair value of contingent consideration |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
12. Share-based compensation
Components of share-based compensation expense are as follows:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Cost of sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Sales, general, and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Stock options |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Market-based stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time-based restricted stock awards and units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Market-based / performance-based restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock purchase plan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
During the three months ended September 30, 2025, and 2024, the Company issued fewer than
13. Income taxes
Generally, income tax provisions for interim periods are based on an estimated annual income tax rate, adjusted for discrete tax items, with any changes affecting the estimated annual effective tax rate recorded in the interim period in which the change occurs. Due to the impact of losses not benefited by the Company's U.S., Canadian and Italian operations, the Company determined the estimated annual effective tax rate method would not provide a reliable estimate of the Company's overall annual effective tax rate. As such, the Company has calculated the tax provision using the actual effective rate for the three and nine months ended September 30, 2025. Due to the impact of temporary differences on the U.S. current tax liability without any deferred tax benefit, the actual effective rate may vary in future quarters.
For the three months ended September 30, 2025, and 2024, the effective tax rate was (
20
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law, which includes a broad range of tax reform provisions affecting businesses. The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. Additionally, the OBBBA permanently eliminates the requirement to capitalize and amortize U.S. based research and experimental expenditures over five years, making these expenditures fully deductible in the period incurred and returns the interest limitation rules under Internal Revenue Code (IRC) Section 163(j) to be calculated on tax basis EBITDA as opposed to earnings before interest and taxes (EBIT). The Company expects these provisions to impact deferred tax assets with a corresponding change in the U.S. valuation allowance. The Company will continue to analyze the OBBBA and its impact on its financial statements.
14. Earnings per share ("EPS")
For the three and nine months ended September 30, 2025, no adjustments were made to net income for purposes of calculating basic and diluted EPS under the treasury stock method.
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited, In thousands) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Weighted average common shares-basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unexercised stock options and stock purchase plan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unvested restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Weighted average common shares-diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
There were
15. Discontinuation of M6 product lines
In February 2025, the Company announced its plan to discontinue its M6-C artificial cervical disc and M6-L artificial lumbar disc product lines (together, the "M6 artificial discs" or "M6 product lines") in order to allocate associated resources and investment to more profitable growth opportunities. In accordance with ASC 205, Presentation of Financial Statements, the Company determined that the discontinuation of the M6 artificial disc did not represent a strategic shift that will have a major effect on its consolidated financial results. Therefore, any related financial results were not reported as discontinued operations. Although the M6 product lines did not meet the criteria to be considered a discontinued operation, these assets were determined to meet the criteria to be classified as held for sale as of March 31, 2025, as the Company expected to complete the sale of these assets before December 31, 2025.
During the second quarter of 2025, following several months of marketing and holding the M6 product lines for sale, the Company determined that it is no longer probable that a sale of the M6 product lines will be completed within one year; therefore, the assets no longer qualify to be classified as held for sale. In accordance with this determination, all assets and liabilities associated with the M6 product lines were reclassified from held for sale to held and used during the second quarter of 2025. However, the Company had also fully impaired all inventory and long-lived assets associated with the M6 product lines as of that date.
21
Financial results for the Company's M6 product lines continue to be presented within the Company's consolidated statements of operations and comprehensive loss.
(Unaudited, U.S. Dollars, in thousands) |
Financial Statement Line Item |
Three Months Ended September 30, 2025 |
|
|
Nine Months Ended September 30, 2025 |
|
||
Inventory reserve charges |
Cost of sales |
$ |
— |
|
|
$ |
|
|
Impairment of property, plant, and equipment |
Operating expenses |
|
— |
|
|
|
|
|
Impairment of developed technology intangible asset |
Acquisition-related amortization, impairment, and remeasurement |
|
— |
|
|
|
|
|
Loss on M6 inventories and long-lived assets held for sale |
$ |
— |
|
|
$ |
|
||
22
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of Orthofix Medical Inc.'s (sometimes referred to as "we," "us" or "our") financial condition and results of operations should be read in conjunction with the discussion under the heading "Forward-Looking Statements" and our condensed consolidated financial statements and related notes thereto appearing elsewhere in this Form 10-Q.
Executive Summary
We are a global medical technology company headquartered in Lewisville, Texas. By providing medical technologies that heal musculoskeletal pathologies, we deliver exceptional experiences and life-changing solutions to patients around the world. We offer a comprehensive portfolio of spinal hardware, bone growth therapies, specialized orthopedic solutions, biologics, and enabling technologies, including the 7D FLASH navigation system. To learn more, visit Orthofix.com and follow on LinkedIn. Information included on our website is not incorporated into, or otherwise creates a part of, this report.
Notable financial metrics in the third quarter of 2025 and recent achievements include the following:
Results of Operations
The following table provides certain items in our condensed consolidated statements of operations as a percent of net sales:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
(Unaudited) |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Net sales |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
Cost of sales |
|
|
27.8 |
|
|
|
31.3 |
|
|
|
32.0 |
|
|
|
32.0 |
|
Gross profit |
|
|
72.2 |
|
|
|
68.7 |
|
|
|
68.0 |
|
|
|
68.0 |
|
Sales, general, and administrative |
|
|
72.0 |
|
|
|
66.2 |
|
|
|
69.3 |
|
|
|
67.8 |
|
Research and development |
|
|
7.2 |
|
|
|
8.8 |
|
|
|
8.4 |
|
|
|
9.4 |
|
Acquisition-related amortization, impairment, and remeasurement |
|
|
1.3 |
|
|
|
3.3 |
|
|
|
3.9 |
|
|
|
3.3 |
|
Operating loss |
|
|
(8.3 |
) |
|
|
(9.6 |
) |
|
|
(13.6 |
) |
|
|
(12.5 |
) |
Net loss |
|
|
(11.1 |
) |
|
|
(13.9 |
) |
|
|
(14.9 |
) |
|
|
(16.6 |
) |
23
Net Sales by Product Category and Reporting Segment
Our operations are managed through two reporting segments: Global Spine and Global Orthopedics. The following table provides net sales by product category by reporting segment:
|
|
Three Months Ended September 30, |
|
|||||||||||||
(Unaudited, U.S. Dollars, in millions) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|
Constant |
|
||||
Bone Growth Therapies |
|
$ |
61.2 |
|
|
$ |
57.9 |
|
|
|
5.7 |
% |
|
|
5.7 |
% |
Spinal Implants, Biologics and Enabling Technologies* |
|
|
108.6 |
|
|
|
102.9 |
|
|
|
5.6 |
% |
|
|
5.6 |
% |
Global Spine* |
|
|
169.8 |
|
|
|
160.8 |
|
|
|
5.6 |
% |
|
|
5.6 |
% |
Global Orthopedics |
|
|
33.6 |
|
|
|
30.5 |
|
|
|
10.1 |
% |
|
|
5.9 |
% |
Pro forma net sales* |
|
|
203.4 |
|
|
|
191.3 |
|
|
|
6.3 |
% |
|
|
5.7 |
% |
Impact from discontinuation of M6 product lines |
|
|
2.2 |
|
|
|
5.3 |
|
|
|
(58.3 |
%) |
|
|
(58.6 |
%) |
Reported net sales |
|
$ |
205.6 |
|
|
$ |
196.6 |
|
|
|
4.6 |
% |
|
|
3.9 |
% |
|
|
Nine Months Ended September 30, |
|
|||||||||||||
(Unaudited, U.S. Dollars, in millions) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|
Constant |
|
||||
Bone Growth Therapies |
|
$ |
178.8 |
|
|
$ |
169.5 |
|
|
|
5.5 |
% |
|
|
5.5 |
% |
Spinal Implants, Biologics and Enabling Technologies* |
|
|
317.8 |
|
|
|
308.3 |
|
|
|
3.1 |
% |
|
|
3.1 |
% |
Global Spine* |
|
|
496.6 |
|
|
|
477.8 |
|
|
|
3.9 |
% |
|
|
3.9 |
% |
Global Orthopedics |
|
|
96.7 |
|
|
|
88.4 |
|
|
|
9.4 |
% |
|
|
7.4 |
% |
Pro forma net sales* |
|
|
593.3 |
|
|
|
566.2 |
|
|
|
4.8 |
% |
|
|
4.5 |
% |
Impact from discontinuation of M6 product lines |
|
|
9.1 |
|
|
|
17.6 |
|
|
|
(48.3 |
%) |
|
|
(48.3 |
%) |
Reported net sales |
|
$ |
602.4 |
|
|
$ |
583.8 |
|
|
|
3.2 |
% |
|
|
2.9 |
% |
* Results above for each of Spinal Implants, Biologics, and Enabling Technologies; Global Spine; and pro forma net sales exclude the impact of the Company's discontinuation of its M6 product lines. As pro forma net sales represent a Non-GAAP measure, see the reconciliation above of the Company's pro forma net sales to its reported figures under U.S. GAAP. The Company's reported figures under U.S. GAAP represent each of the pro forma line items discussed above plus the impact from discontinuation of the M6 product lines shown above.
Global Spine
Global Spine offers the following product categories:
Three months ended September 30, 2025 compared to 2024
Net sales of $172.1 million, an increase of $6.0 million or 3.6%
24
Nine months ended September 30, 2025 compared to 2024
Net sales of $505.7 million, an increase of $10.3 million or 2.1%
Global Orthopedics
Global Orthopedics offers products and solutions for the underserved limb reconstruction market that encompasses four pillars: deformity correction, limb lengthening, complex fracture management, and limb preservation. Global Orthopedics sells its products through a global network of distributors and sales representatives to hospitals, healthcare organizations, and healthcare providers.
Three months ended September 30, 2025 compared to 2024
Net sales of $33.6 million, an increase of $3.1 million or 10.1% on a reported basis and 5.9% on a constant currency basis
Nine months ended September 30, 2025 compared to 2024
Net sales of $96.7 million, an increase of $8.3 million or 9.4% on a reported basis and 7.4% on a constant currency basis
25
Gross Profit
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Net sales |
|
$ |
205,634 |
|
|
$ |
196,606 |
|
|
|
4.6 |
% |
|
$ |
602,401 |
|
|
$ |
583,834 |
|
|
|
3.2 |
% |
Cost of sales |
|
|
57,111 |
|
|
|
61,553 |
|
|
|
(7.2 |
%) |
|
|
192,726 |
|
|
|
186,790 |
|
|
|
3.2 |
% |
Gross profit |
|
$ |
148,523 |
|
|
$ |
135,053 |
|
|
|
10.0 |
% |
|
$ |
409,675 |
|
|
$ |
397,044 |
|
|
|
3.2 |
% |
Gross margin |
|
|
72.2 |
% |
|
|
68.7 |
% |
|
|
3.5 |
% |
|
|
68.0 |
% |
|
|
68.0 |
% |
|
|
0.0 |
% |
Three months ended September 30, 2025 compared to 2024
Gross profit increased $13.5 million
Nine months ended September 30, 2025 compared to 2024
Gross profit increased $12.6 million
Sales, General, and Administrative Expense
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Sales, general, and administrative |
|
$ |
148,102 |
|
|
$ |
130,137 |
|
|
|
13.8 |
% |
|
$ |
417,576 |
|
|
$ |
396,046 |
|
|
|
5.4 |
% |
As a percentage of net sales |
|
|
72.0 |
% |
|
|
66.2 |
% |
|
|
5.8 |
% |
|
|
69.3 |
% |
|
|
67.8 |
% |
|
|
1.5 |
% |
Three months ended September 30, 2025 compared to 2024
Sales, general, and administrative expense increased $18.0 million
26
Nine months ended September 30, 2025 compared to 2024
Sales, general, and administrative expense increased $21.5 million
Research and Development Expense
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Research and development |
|
$ |
14,774 |
|
|
$ |
17,294 |
|
|
|
(14.6 |
%) |
|
$ |
50,474 |
|
|
$ |
54,835 |
|
|
|
(8.0 |
%) |
As a percentage of net sales |
|
|
7.2 |
% |
|
|
8.8 |
% |
|
|
(1.6 |
%) |
|
|
8.4 |
% |
|
|
9.4 |
% |
|
|
(1.0 |
%) |
Three months ended September 30, 2025 compared to 2024
Research and development expense decreased $2.5 million
Nine months ended September 30, 2025 compared to 2024
Research and development expense decreased $4.4 million
Acquisition-related Amortization, Impairment, and Remeasurement
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Acquisition-related amortization, impairment, and remeasurement |
|
$ |
2,693 |
|
|
$ |
6,521 |
|
|
|
(58.7 |
%) |
|
$ |
23,547 |
|
|
$ |
19,305 |
|
|
|
22.0 |
% |
As a percentage of net sales |
|
|
1.3 |
% |
|
|
3.3 |
% |
|
|
(2.0 |
%) |
|
|
3.9 |
% |
|
|
3.2 |
% |
|
|
0.7 |
% |
Acquisition-related amortization, impairment, and remeasurement consists of (i) amortization and impairment related to intangible assets acquired through business combinations or asset acquisitions and (ii) remeasurement of related contingent consideration arrangements, which are recognized immediately upon acquisition.
Three months ended September 30, 2025 compared to 2024
Acquisition-related amortization, impairment, and remeasurement decreased $3.8 million
27
Nine months ended September 30, 2025 compared to 2024
Acquisition-related amortization, impairment, and remeasurement increased $4.2 million
Non-operating Income and Expense
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Interest expense, net |
|
$ |
(4,681 |
) |
|
$ |
(5,210 |
) |
|
|
(10.2 |
%) |
|
$ |
(13,137 |
) |
|
$ |
(14,711 |
) |
|
|
(10.7 |
%) |
Other income/(expense), net |
|
|
(535 |
) |
|
|
(2,528 |
) |
|
|
(78.8 |
%) |
|
|
6,441 |
|
|
|
(6,312 |
) |
|
|
(202.0 |
%) |
Three months ended September 30, 2025 compared to 2024
Interest expense, net decreased $0.5 million
Other income (expense), net increased $2.0 million
Nine months ended September 30, 2025 compared to 2024
Interest expense, net decreased $1.6 million
Other income (expense), net increased $12.8 million
28
Income Taxes
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2025 |
|
|
2024 |
|
|
% Change |
|
||||||
Income tax expense |
|
$ |
533 |
|
|
$ |
751 |
|
|
|
(29.0 |
%) |
|
$ |
1,352 |
|
|
$ |
2,686 |
|
|
|
(49.7 |
%) |
Effective tax rate |
|
|
(2.4 |
%) |
|
|
(2.8 |
%) |
|
|
0.4 |
% |
|
|
(1.5 |
%) |
|
|
(2.9 |
%) |
|
|
1.4 |
% |
Three months ended September 30, 2025 compared to 2024
Nine months ended September 30, 2025 compared to 2024
Liquidity and Capital Resources
Cash, cash equivalents, and restricted cash at September 30, 2025, totaled $65.9 million compared to $85.7 million at December 31, 2024. The following table presents the net change in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2025, and 2024, respectively:
|
|
Nine Months Ended September 30, |
|
|||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Net cash provided by operating activities |
|
$ |
5,650 |
|
|
$ |
2,060 |
|
|
$ |
3,590 |
|
Net cash used in investing activities |
|
|
(23,727 |
) |
|
|
(26,445 |
) |
|
|
2,718 |
|
Net cash provided by (used in) financing activities |
|
|
(3,163 |
) |
|
|
19,222 |
|
|
|
(22,385 |
) |
Effect of exchange rate changes on cash |
|
|
1,448 |
|
|
|
(40 |
) |
|
|
1,488 |
|
Net change in cash and cash equivalents |
|
$ |
(19,792 |
) |
|
$ |
(5,203 |
) |
|
$ |
(14,589 |
) |
The following table presents free cash flow, a non-GAAP financial measure, which is calculated by subtracting capital expenditures from net cash from operating activities:
|
|
Nine Months Ended September 30, |
|
|||||||||
(Unaudited, U.S. Dollars, in thousands) |
|
2025 |
|
|
2024 |
|
|
Change |
|
|||
Net cash provided by operating activities |
|
$ |
5,650 |
|
|
$ |
2,060 |
|
|
$ |
3,590 |
|
Capital expenditures |
|
|
(23,749 |
) |
|
|
(26,345 |
) |
|
|
2,596 |
|
Free cash flow |
|
$ |
(18,099 |
) |
|
$ |
(24,285 |
) |
|
$ |
6,186 |
|
Operating Activities
Cash flows from operating activities increased $3.6 million
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Two of our primary working capital accounts are accounts receivable and inventory. Days sales in receivables were 59 days at September 30, 2025, compared to 58 days at September 30, 2024 (calculated using third quarter net sales and ending accounts receivable). Inventory turns improved to 1.5 times as of September 30, 2025 compared to 1.2 times as of September 30, 2024 (calculated using trailing twelve-month cost of goods sold and ending net inventories).
Investing Activities
Cash flows used in investing activities decreased $2.7 million
Financing Activities
Cash flows from financing activities decreased $22.4 million
Credit Facilities
On November 7, 2024, we entered into a $275.0 million secured credit agreement (the "Credit Agreement") with Oxford Finance LLC, as administrative agent and as collateral agent ("Oxford") and certain lenders party thereto, including Oxford, K2 HealthVentures LLC, and HSBC Ventures USA Inc. Certain of our foreign subsidiaries joined the Credit Agreement as guarantors shortly after the signing date. The Credit Agreement provides for a $160.0 million senior secured term loan (the "Initial Term Loan") and a $65.0 million senior secured delayed draw term loan facility (the "Term B Loan"). Draws under the Term B Loan are at our option from January 1, 2025 through June 30, 2026, subject to, among other conditions, our continued compliance with a pro-forma total debt-to-EBITDA leverage ratio of less than 4.0x. EBITDA is a non-GAAP financial measure which represents earnings before interest income (expense), income taxes, depreciation, amortization, and other negotiated addbacks and adjustments. In addition, at Oxford's discretion, an additional $50.0 million of draw capacity is available through January 1, 2029 (the "Term C Loan" and, together with the Term B Loan, the "Delayed Draw Term Loans" and collectively with the Initial Term Loan, the "Credit Facilities"). The Initial Term Loan and Delayed Draw Term Loans, to the extent ultimately drawn, will each mature in November 2029, following an interest-only payment period ending December 2028, and monthly amortization of principal and accrued interest between January 2029 and November 2029.
The Credit Agreement contains financial covenants requiring us to maintain a minimum level of liquidity at all times and to maintain a maximum total debt-to-EBITDA leverage ratio (measured on a quarterly basis) during the term of the facility. As of September 30, 2025, we were in compliance with all required financial covenants.
As of September 30, 2025, we had $160.0 million of outstanding borrowings under the Credit Agreement related to the Initial Term Loan. We have not made any borrowings under the Delayed Draw Term Loans as of September 30, 2025.
As of September 30, 2025, we had no borrowings on our available lines of credit in Italy, which provide up to an aggregate amount of €5.5 million ($6.5 million).
Other
For information regarding contingencies, see Note 7 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein.
Lattus Spine LLC ("Lattus") Contingent Consideration
Under the terms of a contingent consideration obligation in a purchase agreement assumed in the SeaSpine Merger, we may be required to make installment payments at certain dates based on future net sales of certain products (the "Lateral Products"). We made payments under this arrangement of $6.3 million during the nine months ended September 30, 2025. The estimated fair value of the remaining contingent consideration arrangement as of September 30, 2025, was $7.3 million; however, the actual amount ultimately paid could be higher or lower than the estimated fair value of the contingent consideration. As of September 30, 2025, we
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classified the remaining contingent consideration liability of $4.0 million and $3.3 million within other current liabilities and other long-term liabilities, respectively. For additional discussion of this matter, see Note 6 of the Notes to the Unaudited Condensed Consolidated Financial Statements.
Off-balance Sheet Arrangements
As of September 30, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, cash flows, liquidity, capital expenditures or capital resources that are material to investors.
Contractual Obligations
There have been no material changes in any of our material contractual obligations as disclosed in our Form 10-K for the year ended December 31, 2024.
Critical Accounting Estimates
Our discussion of operating results is based upon the condensed consolidated financial statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting estimates during the quarter covered by this report.
Recently Issued Accounting Pronouncements
See Note 2 of the Notes to the Unaudited Condensed Consolidated Financial Statements for detailed information regarding the status of recently issued or adopted accounting pronouncements.
Non-GAAP Financial Measures
We believe that providing non-GAAP financial measures that exclude certain items provides investors with greater transparency to the information used by senior management in its financial and operational decision-making. We believe it is important to provide investors with the same non-GAAP financial measures used to supplement information regarding the performance and underlying trends of our business operations to facilitate comparisons to historical operating results and internally evaluate the effectiveness of our operating strategies. Disclosure of these non-GAAP financial measures also facilitates comparisons of our underlying operating performance with other companies in the industry that also supplement their U.S. GAAP results with non-GAAP financial measures.
The non-GAAP financial measures used in this filing may have limitations as analytical tools and should not be considered in isolation or as a replacement for U.S. GAAP financial measures. Some limitations associated with the use of these non-GAAP financial measures are that they exclude items that reflect an economic cost that can have a material effect on cash flows.
Constant Currency
Constant currency is calculated by using foreign currency rates from the comparable, prior year period to present net sales at comparable rates. Constant currency can be presented for numerous U.S. GAAP measures but is most commonly used by management to analyze net sales without the impact of changes in foreign currency rates.
Free Cash Flow
Free cash flow is calculated by subtracting capital expenditures from net cash from operating activities. Management uses free cash flow as an important indicator of how much cash is generated or used by our normal business operations, including capital expenditures. Management uses free cash flow as a measure of progress on its capital efficiency and cash flow initiatives.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our market risks as disclosed in our Form 10-K for the year ended December 31, 2024.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. These include controls and procedures designed to ensure that this information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2025. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information regarding legal proceedings, see Note 7 to the Notes to the Unaudited Condensed Consolidated Financial Statements contained herein, which is incorporated by reference into this Part II, Item 1.
Item 1A. Risk Factors
There have been no material changes from the risk factors disclosed in "Part I, Item 1A. Risk Factors" in our Form 10-K for the year ended December 31, 2024.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We have not made any repurchases of our common stock during the third quarter of 2025.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the last fiscal quarter, none of our
Item 6. Exhibits
31.1* |
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Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
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31.2* |
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Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
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32.1# |
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Section 1350 Certifications of each of the Chief Executive Officer and Chief Financial Officer. |
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101.INS* |
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Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB* |
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Inline XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104* |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Filed herewith.
# Furnished herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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ORTHOFIX MEDICAL INC. |
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Date: November 4, 2025 |
By: |
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/s/ MASSIMO CALAFIORE |
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Name: |
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Massimo Calafiore |
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Title: |
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President and Chief Executive Officer |
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Date: November 4, 2025 |
By: |
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/s/ JULIE ANDREWS |
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Name: |
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Julie Andrews |
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Title: |
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Chief Financial Officer |
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