Orthofix reports Q4 and full year 2023 results

Orthofix Medical Inc. reported its financial results for the fourth quarter and year ended December 31, 2023, and issued guidance for the full year 2024.

Fourth quarter net sales were $200.4 million, an increase of 64% on a reported basis and 7% on a pro forma constant currency basis. Net loss was $(22.2) million and earnings per share (“EPS”) was $(0.59) on a reported basis, representing an improvement of 19% when compared to pro forma results for the prior year period. Non-GAAP adjusted EBITDA was $19.6 million for the fourth quarter, representing 96% growth over pro forma results for the fourth quarter of 2022.

Full year net sales were $746.6 million, an increase of 62% on a reported basis and 6% on a pro forma constant currency basis. Net loss was $(151.4) million and EPS was $(4.12). Non-GAAP adjusted EBITDA was $46.3 million for the full year, representing 69% growth over pro forma results for the full year of 2022.

“We are pleased to report another quarter of strong performance as Orthofix completes its first full year as a combined company with SeaSpine. We delivered accelerated growth exiting 2023 and demonstrated resilience, increased internal efficiencies and cost synergies,” said Massimo Calafiore, President and Chief Executive Officer of Orthofix. “I am thrilled to join Orthofix at such a pivotal moment in the Company’s story, wherein the business fundamentals are strong, we are well positioned to deliver profitable growth in 2024, and we are continuing to accelerate our leverage on revenue. After reflecting on my first two months in this role, it is evident that Orthofix’s balanced and complementary product mix offers a differentiated advantage across multiple markets. I look forward to leveraging that unique portfolio platform to drive future value through profitable growth.”

Financial results overview
Fourth quarter 2023 net sales and financial results
The following table provides net sales by major product category by reporting segment on a reporting basis:

Further, the following table provides net sales by major product category by reporting segment on a pro forma basis:

Gross margins were 68.2% for the fourth quarter ended December 31, 2023 and were 72.2% on a non-GAAP adjusted basis compared to pro-forma non-GAAP adjusted gross margin of 68.9% in the prior year period.

Net loss was $(22.2) million, or $(0.59) per share, compared to pro forma net loss of $(26.0) million, or $(0.73) per share in the prior year period. Non-GAAP adjusted EBITDA was $19.6 million, or 9.8% of net sales, compared to pro forma non-GAAP adjusted EBITDA of $10.0 million, or 5.4% of pro forma net sales, in the prior year period.

Full year 2023 net sales and financial results
The following table provides net sales by major product category by reporting segment on a reporting basis:

Further, the following table provides net sales by major product category by reporting segment on a pro forma basis:

Gross margins were 65.1% and were 71.4% on a non-GAAP adjusted basis compared to pro forma non-GAAP adjusted gross margin of 68.7% in the prior year.

Net loss was $(151.4) million, or $(4.12) per share, compared to pro forma net loss of $(84.8) million, or $(2.39) per share in the prior year. Non-GAAP adjusted EBITDA was $46.3 million, or 6.2% of net sales, compared to pro forma non-GAAP adjusted EBITDA of $27.4 million, or 3.9% of pro forma net sales, in the prior year period.

Liquidity
As of December 31, 2023, cash, cash equivalents, and restricted cash totaled $37.8 million compared to $50.7 million on December 31, 2022. As of December 31, 2023, the Company had $100.0 million in borrowings outstanding under its four year $150.0 million Financing Agreement. The Company subsequently borrowed an additional $15.0 million in January 2024.

Business outlook
The company is providing 2024 full year guidance as follows:

• Net sales to range between $785 million to $795 million, representing implied growth of 5% to 7% year-over-year on a constant currency basis. These expectations are based on the current foreign currency exchange rates and do not take into account any additional potential exchange rate changes that may occur this year.
• Non-GAAP adjusted EBITDA of $62 million to $67 million, representing a $15.7 million to $20.7 million increase, over the full year 2023
• Exit Q4 2024 free cash flow positive

MB Bureau